Tesla is cutting nine per cent of its workforce in a "comprehensive organizational restructuring", according to an internal email sent by its CEO Elon Musk on Tuesday. Musk said the layoffs won't affect production of the Model 3, since no production associates are being be cut.
Tesla has promised it will produce 5,000 Model 3 cars per week by July.
The rep also tells The Drive that the company is still hiring rapidly and that after this round of job cuts, Tesla will still boast more employees than it had at the beginning of 2018. Tesla ended last year with 37,543 employees, more than 12 times its headcount five years earlier.
The company will also not renew its contract with U.S. hardware chain Home Depot, which now sells the company's solar panels and home energy systems, though "the majority" of Tesla staff now placed in Home Depot stores will move over to Tesla retail positions.
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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. The decision was made so Tesla can focus its efforts on selling solar power in its own stores and online, and the majority of employees working at Home Depot stores will be given the opportunity to move over to Tesla retail locations.
Tesla has not made an annual profit in its 15 years of doing business, and it has posted only two quarterly net profits.
Last month, Musk had hinted at a reorganisation but did not give details. Tesla share prices rose more than 10 percent after Musk made those pledges, but they fell back somewhat immediately after the layoffs came to light. The layoffs would hit about 3,800 employees, company-wide. Musk said Tesla is making the move now so it never has to do it again.
Tesla has been under intense pressure to prove that it can achieve mass production of the Model 3, its first mass market vehicle.
"It is very hard to say goodbye", Musk said in the letter.