Thu, Jun 14, 2018 - Page 10 News List

Tesla cuts 9 percent of its workforce in profit search

Reuters

People inspect a Model 3 at a Tesla dealership in Chicago, Illinois, on March 30.

Photo: AFP

Tesla Inc is cutting several thousand jobs as it seeks to reduce costs and become sustainably profitable without endangering the critical ramp up of production of its Model 3 sedan.

In an e-mail he said had been sent to staff, chief executive officer Elon Musk on Tuesday said that the cuts were part of a simplification of Tesla’s management structure promised last month.

“As part of this effort, and the need to reduce costs and become profitable, we have made the difficult decision to let go of approximately 9 percent of our colleagues across the company,” the e-mail read.

“These cuts were almost entirely made from 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,” it said.

Tesla said it began notifying affected workers on Tuesday and would continue to do so throughout the week.

It would reduce overall employment back to about 37,000 — roughly in line with numbers at the end of last year, a spokesman said.

Musk also said that Tesla had decided not to renew a residential sales agreement with Home Depot, and would focus instead on selling its solar products through its own stores and Web site. The company would seek to re-employ Tesla employees at Home Depot stores at its own locations.

Musk told employees last month that the company was undergoing a “thorough reorganization” as it contends with production problems, senior staff departures and recent crashes involving its electric cars.

At the start of April, the company’s shares had fallen by about 35 percent from a peak hit in September last year, but signs that it is on course to meet an output target of 5,000 Model 3 cars per week have wiped out almost all of this year’s losses.

Shares in the company rose as much as 7 percent on Tuesday, although they fell back to stand just 3 percent higher on the day.

CFRA Research analyst Efraim Levy said that a “9 percent job cut is a good number and I don’t think there will be more job cuts in the near term.”

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