Monday, 22 October, 2018

Tesla to cut 9pc of jobs as it seeks profitability

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Priscilla Morrison | 14 June, 2018, 11:34

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

The electric auto company is laying off 9 percent of its global workforce.

Tesla is laying off about 9 percent of its workforce, according to the company's CEO, Elon Musk. Well, Tesla supposedly had around 37,500 employees at the end of last year, with CNBC saying it has since added 8,000 more since the beginning of this year.

Tesla said the more than 3,000 cuts would affect mostly salaried employees, excluding workers producing its cars. He said Tesla's rapid growth in recent years contributed to the duplication of roles and creation of jobs that the company could no longer justify.

Musk says Tesla is making the move now so it never has to do it again.

While confirming that no factory or production employees would be cut, the company did not clarify how much the move would save. With today's layoff news, Tesla's stock is back on the rise - up roughly 3.2 percent from yesterday's price at market close.

More news: Afghanistan join Test ranks with maiden tie against India

During the company's first-quarter earnings call in May, CEO Elon Musk said the company would begin restructuring operations in an effort to meet its profitability goals.

GBH Insights analyst Daniel Ives sees the ghosts of Model 3 obstacles past finally dissipating, forecasting the company is approaching 500 to 600 Model 3 cars being built each day.

The layoffs will not affect the Model 3 ramp up.

Musk also announced Tesla will not renew a residential sales agreement it had with Home Depot. It's largest effort yet by Tesla to become more profitable, and after the news, the company's stock rose by 3.2% to a three-month high of $US342.77. "It is very hard to say goodbye", the CEO wrote.

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.

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