Tesla to slash thousands of jobs in profitability drive

Seeing Tesla Improving Production Rate: Keybank

Seeing Tesla Improving Production Rate: Keybank

CEO Elon Musk says in an e-mail to workers Tuesday that the cuts amount to about 9 per cent of the company's work force of 40,000.

According to sources familiar with the matter, there was a round of layoffs at Tesla that started on Monday and it is going to be made official by Tesla CEO Elon Musk today. For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network.

Last week, Musk overcame an attempt to strip him of his role as chairman of Tesla's board, a plan introduced by a company shareholder who raised doubts about Musk's ability to manage multiple companies simultaneously.

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Shares of Tesla were up about 3.8% at the time of writing. The company let go of 400 to 700 workers last fall after completing annual performance reviews, and it laid off a small number of workers back in 2008.

The email then shifts in tone and notes that the cuts will not impact the company's delayed production schedule for its latest vehicle model: "These cuts were nearly entirely made form our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months". I also want to emphasize that we are making this hard decision now so that we never have to do this again. Musk also has talked about a restructuring of its production line, after failing to meet Model 3 goals.

Tesla shares rose 2.5 percent to $340.34 in afternoon trading, after reaching as high as $354.97 around noon.

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In addition to the restructuring, Tesla won't renew a residential sales agreement with Home Depot Inc. and focus instead on selling solar power in its own stores and online, Musk wrote. The areas were to be outfitted during the first half of this year and staffed by Tesla employees to demonstrate that its panels and batteries have mainstream appeal.

It means that Tesla could let go over 3,000 employees in this round of layoffs. Tesla is up 11.3% this year.

Musk said the cutbacks would not affect the company's ability to reach Model 3 production targets in the coming months.

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