Currently reading: Tesla to cut 9% of workforce as part of restructuring to become profitable

Company founder Elon Musk says job losses will centre on duplicated roles and will not affect Model 3 production targets

Tesla is cutting around 9% of its workforce as part of ‘restructuring’ moves to reduce costs – but company founder Elon Musk has insisted the move will not affect its ability to reach Model 3 production targets.

Musk confirmed the job cuts on social media after an internal email became public. The company has yet to make a profit since it was founded by the entrepreneur in 2003, and Musk said following a “comprehensible organizational restructuring".

Tesla is understood to have had around 37,500 employees at the end of last year, with CNBC reporting it has added 8000 since the start of 2018. That would mean around 4000 jobs will be lost in the restructuring.

He added: “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.

“As part of this effort, and the need to reduce costs and become profitable, we have made the difficult decision to let go of approximately 9% of our colleagues across the company. These cuts were almost entirely made from our salaried population and no production associated were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”

The firm has missed a series of its own production targets for the large volume Model 3 in recent months, citing production issues at its factory. Musk also recently had a tense exchange with financial analysts after the firm reported record losses.

Musk claimed the profit has never been Tesla’s motivation, adding: “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. That is a valid and fair criticism of Tesla’s history to date.”

Musk added that the employees affected would be notified this week, and that Tesla is also continuing to flatten its management structure to “help us communicate better, eliminate bureaucracy and move faster.” He added that laid off employees would received “significant” salary payments and stock in Tesla.

Noting that a “difficult job” remains ahead, Musk added: “We are a small company in one of the toughest and most competitive industries on Earth, where just staying alive, let alone growing, is a form of victory.

“Despite our tiny size, Tesla has already played a major role in moving the auto industry towards sustainable electric transport and moving the energy industry towards sustainable power generation and storage.”

Despite the struggle to become profitable, Tesla has continued to push ahead, with Musk announcing a string of new models in recent months, including a new Roadster, performance versions of the Model 3 and a compact hatchback.

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James Attwood

James Attwood, digital editor
Title: Acting magazine editor

James is Autocar's acting magazine editor. Having served in that role since June 2023, he is in charge of the day-to-day running of the world's oldest car magazine, and regularly interviews some of the biggest names in the industry to secure news and features, such as his world exclusive look into production of Volkswagen currywurst. Really.

Before first joining Autocar in 2017, James spent more than a decade in motorsport journalist, working on Autosport, autosport.com, F1 Racing and Motorsport News, covering everything from club rallying to top-level international events. He also spent 18 months running Move Electric, Haymarket's e-mobility title, where he developed knowledge of the e-bike and e-scooter markets. 

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The Apprentice 13 June 2018

On the subject of buying,

On the subject of buying, perhaps Tesla should have snapped up Mitsubishi before Nissan took a large stake in them. OK their cars are not premium but they know how to build, have experience with electric drives, EV software. 

xxxx 13 June 2018

Progress

"Future shock.All 40million cars on the roads in Germany are now electric" will that be by Thursday next week? It won't be overnight and no one's planning for 100% BEV. There'll be a balance, oh and all your statement don't allow for the fact you won't need so much electricity to create petrol/ diesel, google it and you'll be surprized how much power you need.

k12479 13 June 2018

"...company founder Elon Musk"

Musk was not the founder of Tesla.

Torque Stear 13 June 2018

k12479 wrote:

k12479 wrote:

Musk was not the founder of Tesla.

Legally speaking he is recognised as a founder.

They may have incorportated the company before he joined but they had not achieved anything before he invested both his money and his time.