Tesla to Cut 9% of Workforce in Profit Push

"It is clear that Tesla is under tremendous pressure to finally turn a profit and is attempting to address it by cutting overhead."
Matthew HellerJune 13, 2018

Tesla Motors has announced the biggest layoff in its 15-year history in a move to cut overhead as it faces increasing pressure to show a profit.

CEO Elon Musk told workers in an email Tuesday that management had “made the difficult decision to let go of approximately 9% of our colleagues across the company,” with the cuts to come entirely from salaried positions.

Tesla currently employs about 46,000 workers, meaning it will shed about 4,100 jobs through the layoff.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“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 said. But he added that Tesla will never achieve its mission of accelerating “the world’s transition to sustainable, clean energy … unless we eventually demonstrate that we can be sustainably profitable.”

At the company’s annual meeting June 5, Musk said he expected the company to post profits during the July-to-September and October-to-December periods.

“It is clear that Tesla is under tremendous pressure to finally turn a profit and is attempting to address it by cutting overhead,” Michelle Krebs, executive analyst for Autotrader, told The Washington Post. “Also notable is Tesla is not cutting production jobs at a time when pushing Model 3s out the door is a top priority.”

The Model 3, Tesla’s first mass-market car, has been dogged with production problems, but Musk has set a goal of 5,000 vehicles a week by the end of June.

“A focus on ‘getting lean’ is a positive with respect to Tesla’s guidance for achieving consolidated profitability in 2018, in our view,” Consumer Edge Research analyst James Albertine wrote in a note to investors.

Tesla ended last year with 37,543 employees, more than 12 times its head count five years earlier.

“Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel,” Musk said. “I also want to emphasize that we are making this hard decision now so that we never have to do this again.”