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Tesla to cut 9pc of jobs as it seeks profitability

James Cook
Tesla is cutting 9pc of jobs as chief executive Elon Musk seeks profitability. - REUTERS

Tesla announced on Tuesday that it would cut 9pc of jobs across the company. Chief executive Elon Musk said in an internal memo that his company’s growth had lead to what he called “duplication of roles”.

“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,” Musk wrote in the internal memo announcing the job cuts. 

“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 eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date.”

The email from Musk said that no production staff were cut in the reorganisation. “This will not affect our ability to reach Model 3 production targets in the coming months.”

Tesla will also end a residential sales agreement with Home Depot. Instead, the company will sell its solar panels in its own Tesla stores and also online. “The majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations,” Musk wrote.

The company started selling its solar panel technology through 800 Home Depot locations in the US earlier this year, which followed a deal between the retail chain and solar panel manufacturer SolarCity. Tesla acquired SolarCity in 2016.

Musk has previously faced criticism on whether his company can reach production targets for its Model 3 electric car. 

Last week Morgan Stanley analysts expressed skepticism of Musk’s claim that Tesla was “quite likely” to reach production of 5,000 Model 3 cars per week by the end of June. Morgan Stanley analysts expected Tesla to reach that production goal in 2019, they said.

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The company did not meet its goal of producing 2,500 cars a week by the end of March, it said in its most recent earnings report. In April, it only produced 2,270 cars a week.

Tesla also announced in its quarterly earnings report last month that it expects to reach profitability in the third and fourth quarters of 2018. That goal relies on the company reaching its Model 3 production goal, Musk wrote in an email to staff.

The most recent quarterly earnings call highlighted the tension between Tesla and analysts. During the call, Musk referred to questions from analysts as “boring” and “boneheaded.” “They’re killing me,” he said at one point.

Musk announced in May that he was preparing to flatten the company’s structure as part of a “thorough reorganization.” The company said that it would cut activities that were not “vital to the success” of the car manufacturer.

The reorganisation follows the departure of several senior Tesla employees in recent months. The company’s director of field performance engineering, Matthew Schwall, joined rival car manufacturer Waymo in May. And Jim Keller, the head of Tesla’s Autopilot drive assistance system, left the company for Intel in April.