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Tesla to slash thousands of jobs in profitability drive

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image captionTesla's Model 3 is crucial to the company's profitability

Tesla said it plans to cut 9% of its workforce as part of a restructuring intended to reduce costs and boost profitability.

The job cuts at Elon Musk's electric car maker come as it tries to increase production of its Model 3 sedan and turn a quarterly profit this year.

Tesla said the more than 3,000 cuts would affect mostly salaried employees and not those making its cars.

Mr Musk said the move had been a "difficult decision".

Tesla employed more than 37,000 people at the end of last year.

"Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us," he wrote in an email to employees and posted on Twitter.

"What drives us is our mission to accelerate the world's transition to sustainable, clean energy, but we will never achieve that mission unless we can eventually demonstrate that we can be sustainably profitable."

Is Tesla heading for trouble?

Last month Mr Musk said the company was planning a wide-ranging reorganisation that would flatten its management structure.

In the email, he said the cuts are aimed at eliminating duplicate roles and he does not expect them to affect the firm's production ability.

Tesla employees based at US DIY chain Home Depot and involved with the home solar business Tesla acquired when it bought SolarCity are among those affected, he said.

The "majority" of those workers will be offered positions in Tesla's retail business, Mr Musk added.

Michelle Krebs, an Autotrader analyst, said the job cuts were not a surprise.

"It is clear that Tesla is under tremendous pressure to finally turn a profit and is attempting to address it by cutting overhead," she said.

"Also notable is Tesla is not cutting production jobs at a time when pushing Model 3s out the door is a top priority."

Related Topics

  • Electric cars
  • Companies
  • Elon Musk
  • Tesla

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