Tesla cuts 9% of workforce: Musk shares full "reorg" letter

Musk to fire 9% of staff in ‘difficult reorganization’ of perpetually unprofitable Tesla

Daniel Becerril

CEO Elon Musk said in an e-mail to workers Tuesday that the cuts amount to about 9 percent of the company's workforce of 40,000. The cuts, which focus nearly exclusively on salaried employees, do not include any production associates and thus will not affect the company's Model 3 production targets over the coming months.

Tesla said the more than 3,000 cuts would affect mostly salaried employees, excluding workers producing its cars.

Musk in the email thanked the employees leaving the company and said the individuals will receive compensation.

The move coincided with a significant jump in Tesla's stock price following a report from Keybanc Capital Markets that it increased its second-quarter production outlook for the Model 3 by 50 percent.

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Musk says the company is motivated by turning a profit.

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 move is part of an organizational restructuring that Musk announced earlier in the year.

Last month, Musk warned employees in a separate letter obtained by Electrek that Tesla is undertaking a "reorg" that would flatten the management structure and trim activities "that are not vital to the success of our mission".

Shares in the company rose as much as 7 per cent on Tuesday, although they fell back to stand just 3 per cent higher on the day after Musk's announcement. According to Bloomberg, this is the largest layoff in Tesla's 15-year history.

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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.

Tesla also said it was not renewing its residential sales agreement with retailer Home Depot in order to focus on selling solar power in Tesla stores and online.

Musk noted that no production workers would be let go to ensure that Model 3 production would not be affected by the cuts.

"It is very hard to say goodbye", Musk said in the letter.

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