Tesla to Cut 9 Percent of Workforce

Tesla told its employees that it will cut around 9 percent of its workforce, letting go of mostly salaried positions.

Tesla has already added roughly 8000 jobs since the beginning of the year, currently employing approximately 46,000 workers. Though the ongoing reorganization, the business will shed about 4,100 jobs.

During the middle of the day, Tesla’s chief executive officer Elon Musk had warned that the company was undertaking a “thorough reorganization” and that it would flatten its management structure.

“As described previously, we are conducting a comprehensive organizational restructuring across our whole company. Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are difficult to justify today,” said Tesla in an email to its employees.

Musk added, “To be clear, 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. I also want to emphasize that we are making this hard decision right now so that we never have to do this again.”

In a tweet, the Tesla CEO echoed his sentiment and said that the cuts were “difficult but necessary.”

For CFRA analyst Efraim Levy, the news was a sign the automaker giant is maturing and prioritizing profitability.

“There is a normal ebb and flow of hiring and firing in a business,” he stated. “Nine percent is a big chunk to do at once, but there comes a time when a company grows up and they have to cut out the fat to become more efficient,” he added.

On the flip side, Musk said in the email that “profit is obviously not what motivates us,” citing the company historical lack of it. He added, though, that now Tesla needs to reduce costs and make some money.

Before the announcement of the job cuts, Tesla shares had been trading 5 percent higher and the stock was on its way to show its best performance since February 2014. After the news, the stock gave up some of its gains, though it was still on pace for its 3^rd consecutive day of gains.

Even if the sentiment for its stock, the automaker has shown signs of being a company is distress. It has been dishing out billions of dollars as it tries to ramp up the production of its Model 3 sedan, which is the company’s lowest-priced vehicle. The Model 3 sedan is also the company’s first attempt to make a car for the mass market.

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