Tesla to lay off 9% of workers as part of restructuring plan
Jun 13 2018
Musk explained that the job cuts are part of a restructuring, adding that the layoffs should help reduce costs and finally make the company profitable.
Musk said the layoffs won't affect production of the Model 3, since no production associates are being be cut.
He noted that Tesla has never made an annual profit - a point that's often made by critics.
"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". The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.
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.
The company also said it will stop selling rooftop solar energy systems through kiosks at Home Depot stores, declining to renew an agreement for the in-store sales channel at a time when Tesla's residential solar installations have dropped to a four-year low as the company tries to stem losses at the business it acquired from SolarCity in November 2016. Employees told the paper that they received "little or no warnings" before the firings, which reportedly targeted 400 to 700 employees, leading to "lowered morale through many departments".
At the start of April, the company's shares had fallen by around 35 percent from a peak hit last September but signs that it is on course to meet an output target of 5,000 Model 3 cars per week have wiped out nearly all of this year's losses.
Model 3 production has been viewed as a critical bellwether of Tesla's near-term profitability. The company will seek to re-employ most Tesla employees at Home Depot stores at its own locations. "I'm deeply grateful for your many contributions to our mission". In order to minimize the impact, Tesla is providing significant salary and stock vesting (proportionate to length of service) to those we are letting go.
"One of the biggest mistakes we made was trying to automate things that are super easy for a person to do, but super hard for a robot to do", he said.
"We are conducting a comprehensive organizational restructuring across our whole company", Musk wrote in the memo.