Elon Musk announces Tesla to cut 9 percent of jobs

Seeing Tesla Improving Production Rate: Keybank

Seeing Tesla Improving Production Rate: Keybank

In an email to workers on Tuesday, Musk said the cuts amount to about 9 percent of the company's workforce of 40,000.

According to sources familiar with the matter, there was a round of layoffs at Tesla that started on Monday and it is going to be made official by Tesla CEO Elon Musk today. That is a valid and fair criticism of Tesla's history to date.

Musk also said that Tesla had decided not to renew a residential sales agreement with Home Depot (HD.N), and would focus instead on selling its solar products through its own stores and website. That price target is about 10% lower than Tesla stock's recent prices near $332 per share.

The move will not affect factory workers as Tesla continues to ramp up production of its lower-priced Model 3 compact auto. Each time, after a few quarters of small profits, Tesla would ramp up production of another vehicle model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows. "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".

Tesla's workforce has grown at an incredible pace since the acquisition of SolarCity, which pushed Tesla's total headcount to over 30,000 employees. I also want to emphasize that we are making this hard decision now so that we never have to do this again.


Shares in the company rose as much as 7 percent on Tuesday, although they fell back to stand just 3 percent higher on the day after Musk's announcement.

Consumer Edge Research Analyst James Albertine wrote in a note to investors that he views the moves "as a positive in helping Tesla track toward profitability later this year".

Tesla has promised to hit a 5,000-cars-per-week production target for the Model 3 by the end of this month.

It means that Tesla could let go over 3,000 employees in this round of layoffs. It can easily top $50,000 with options.

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