Tesla to cut 9pc of jobs as it seeks profitability

Tesla to cut 9pc of jobs as it seeks profitability

Last month, Musk had hinted at a reorganisation but did not give details.

Tesla announced Tuesday it planned to lay off up to nine percent of its workforce, a move that could eliminate thousands of its roughly 40,000 employees.

Musk in the email thanked the employees leaving the company and said the individuals will receive compensation.

The layoffs come in engineering, sales and other front-office functions, but the company says the remaining workforce is large enough to accomplish Musk's lofty goals of rolling out a semi, pickup truck and a new SUV in the coming years. Through the reorganization, Tesla could shed around 4,100 jobs.

Tesla has been facing mounting pressure from investors to ramp up production of its first affordable vehicle model, the Model 3.

Shares of electric automaker Tesla rose during Tuesday's trading session after one Wall Street firm raised its Model 3 production estimates by 50%. Chief executive Elon Musk said in an internal memo that his company's growth had lead to what he called "duplication of roles".

Tesla's stock plummeted as a result.

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Tesla shares pared an earlier gain of as much as 6.9 per cent and were up 3.2 per cent to US$342.81 as of 2:21 p.m.in NY trading.

The move is part of an organizational restructuring that Musk announced earlier in the year. Tesla now makes and installs solar panels and battery packs for homes, businesses, and government utilities. "We must continue to drive that forward for the good of the world".

Musk posted the email on Twitter after the email leaked to media outlets.

"Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us", he wrote. However, the Tesla employees now working with Home Depot will have the option to move to Tesla's own retail stores. Tesla is up 11.3% this year. "I'm deeply grateful for your many contributions to our mission".

"It is very hard to say goodbye", Musk said in the letter.

Affected staff will be informed this week of their job losses, with Musk promising they would receive "significant salary and stock vesting" linked to their length of service. Tesla will, however, continue to take on new staff, as a "significant need for additional production personnel" remains within the company.

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