Business

Musk, in search of profit, cuts Tesla’s workforce

A Tesla supercharging station in Mountain View, Calif. CEO Elon Musk, noting that Tesla had never produced an annual profit since it was founded 15 years ago, said the company needs to become a sustainable money maker.
Jason Henry/New York Times/File 2017
A Tesla supercharging station in Mountain View, Calif. CEO Elon Musk, noting that Tesla had never produced an annual profit since it was founded 15 years ago, said the company needs to become a sustainable money maker.

NEW YORK — Tesla, in the midst of a challenging effort to transform itself from a niche producer of electric vehicles to a mainstream automaker, said Tuesday that it was reducing its workforce by about 9 percent as it aims to become profitable.

The company’s chief executive, Elon Musk, said in a memo he posted on Twitter that most of the employees losing their jobs would come from salaried ranks, and no production workers at Tesla’s car plant in Fremont, California, would be affected.

Musk said the cuts were part of a “comprehensive organizational restructuring across the whole company,” which had about 37,500 employees at the end of last year, according to Bloomberg. He noted that Tesla had never produced an annual profit since it was founded 15 years ago.

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“What drives us is our mission to accelerate the world’s transition to sustainable, clean energy,” he said. “But we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date.”

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The automaker is scrambling to streamline and accelerate assembly of the Model 3, a midsize car that it is counting on to produce enough revenue to offset the billions it is spending to develop new models. Last week, Musk said the company was making about 3,500 Model 3s a week, and expected to increase that to 5,000 a week, the level it says it must reach to become profitable.

He has forecast that Tesla will generate profits in the third and fourth quarters of this year.

In recent weeks, Musk had hinted that a thinning of Tesla’s executive ranks was in the works.

In his memo, he said that Tesla had grown rapidly in the last several years, resulting in duplication of some jobs. The reduction in salaried jobs comes as Tesla is hiring dozens of factory workers each week to ramp up Model 3 output.

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The job cuts “will not affect our ability to reach Model 3 production targets in the coming month,” he said.

In the same memo, Musk said Tesla was ending a sales agreement in which the company has sold its solar panels in Home Depot stores. Tesla moved into the solar panel business in 2016 when it acquired Solar City, a company where Musk had been chairman.