In the quest for profitability, Tesla gives out pink slips
Approximately 3,000 people are slated to lose their jobs.
In a memo to staff, Tesla CEO Elon Musk announced the company was cutting nine percent of its workforce. He explained the cost-cutting move, which means around 3,000 employees will lose their jobs, is necessary to turn Tesla into a profitable company, according to Ars Technica.
Difficult, but necessary Tesla reorg underway. My email to the company has already leaked to media. Here it is unfiltered: pic.twitter.com/4LToWoxScx
— Elon Musk (@elonmusk) June 12, 2018
According to Musk, the layoffs are “almost entirely” in salaried positions and won’t affect the company’s efforts to increase production on the Model 3. The news comes nearly a month after Musk announced a restructuring of Tesla’s organizational chart which flattens the management structure and just days after the CEO survived a board vote to keep him as chairman.
As Ars Technica explains,
Tesla has been burning cash almost continuously since it was founded 15 years ago. The company has enjoyed positive cash flow and profits for only two brief periods in the last eight years—one in late 2013 and another in mid-2016. Each time, after a few quarters of positive cashflow, the company would ramp up production of another car model—first the Model X, then the Model 3—and rack up more big losses, as this chart of free cash flow from Bloomberg shows.
It’s been a busy time in the world of Tesla. One week ago, news leaked that the company was prepping for a 2020 release of the Model Y. The SUV is expected to be a “little sibling” of the Model X and built on the same platform as the Model 3. A few weeks ago, the company reacted to Consumer Reports’ less-than-stellar review of that Model 3, promising to the car’s braking system.
How do you feel about the news regarding the layoffs? Let us know in the comments.
In other electric car news, see:
- Another day, another Tesla crash – right into a police car
- The best version of the Model 3 costs way too much money
- The latest on Tesla’s semi and why now is the time to get excited
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