Tesla is laying off about 3,600 workers

Daniel Fowler
June 13, 2018

Tesla said it plans to cut 9% of its workforce as part of a restructuring meant to reduce costs and boost profitability.

Tesla told CBC News that it had over 42,000 employees around the world.

"We made these decisions by evaluating the criticality of each position, whether certain jobs could be done more efficiently and productively, and by assessing the specific skills and abilities of each individual in the company", Tesla CEO Elon Musk wrote to employees in an email obtained by TechCrunch.

The email then shifts in tone and notes that the cuts will not impact the company's delayed production schedule for its latest vehicle model: "These cuts were nearly entirely made form our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months".

"We are conducting a comprehensive organizational restructuring across our whole company", Musk wrote in the memo. Instead, he said that the cuts were made to job functions that, "are hard to justify today".

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In the note, which he tweeted out after it was leaked to media outlets, Musk said that almost all of the cuts would be salaried positions, and that the production staff is largely unaffected. 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.

Musk's note also said that Tesla will end distribution of its solar power and home battery equipment at Home Depot and focus on direct sales instead.

The move follows Tesla starting a brutal review of contractors and firing everyone that is not vouched for by an employee last month. 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.

"9 percent job cut is a good number and I don't think there will be more job cuts in the near term", Efraim Levy, analyst at CFRA Research said.

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