Published: Tue, June 12, 2018
Markets | By Noel Gibbs

Tesla to layoff 9 percent of workforce

Tesla to layoff 9 percent of workforce

Tesla said after the cuts it would still have more employees than it had at the beginning of 2018.

Elon Musk is cutting 9 per cent of the workforce at Tesla Inc., a turnabout that underscores the mounting pressure he is under to show the electric-car maker can one day turn a profit.

Tesla would not say how much money the layoffs would save, but said no factory workers would be affected as the company continues to ramp up production of its lower-priced Model 3 compact auto.

At the company's annual shareholder meeting earlier this month, Musk said he expected the Palo Alto, California, company to post a quarterly profit during the July-September period.

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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.

Based on conversations with Tesla dealers, KeyBanc Capital analysts raised their expectations for second-quarter delivery of Model 3 vehicles to 30,000 from 20,000.

"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", Musk wrote. Moreover, he said that this round of layoffs is necessary so that "we never have to do this again".

The "majority" of those workers will be offered positions in Tesla's retail business, Mr Musk added. Year-to-date, Tesla's headcount is up roughly 15%.

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"Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are hard to justify today", Musk wrote.

Tesla said it began notifying impacted workers on Tuesday and would continue to do so throughout the week. The company is now producing just under 3,000 per week, Bloomberg estimates.

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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