Tesla’s Workforce Haircut Takes 9 Percent Off the Top


Elon Musk + Tesla Model S Circa 2011

Tesla CEO Elon Musk announced a restructuring of the ambitious but troubled automaker on Tuesday, laying out a plan that will see 9 percent of the company’s workforce laid off.

Calling the decision “difficult, but necessary,” Musk said the cuts will come almost exclusively from its salaried workforce, leaving production workers in place. The company’s production targets for the Model 3 sedan haven’t changed, he insists.

The move comes not long after news of efforts to “flatten” Tesla’s management structure. In a company email he later posted to Twitter, Musk said the cuts are coming this week, adding that duplicated roles and job titles that no longer make sense are the targets of the restructuring. Long-term sustainability lies behind the decision, he added, describing his company’s goal of greenifying the entire world.

For hesitant investors, the profits Musk claims not to seek would go a long way towards calming nerves and boosting confidence. And it seems the past week was good for confidence — the company’s stock rose 17.7 percent between June 6th and this afternoon. (Last week’s typically rosy shareholder meeting gave hardcore believers everything they’d hoped for.)

“Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us,” Musk said in the email. “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. This is a valid and fair criticism of Tesla’s history to date.”

Since the beginning of the year, Musk has been adamant that his company would not have to take on new debt or raise funds this year, despite a record cash burn related to the setback-plagued Model 3 production process. It looks like cost cutting is the solution to this problem, at least in the short term.


Musk plans to build a vehicle assembly/battery plant in Shanghai, with another starting construction in Europe by the end of this year. No shortage of funds will be required.

In last week’s meeting, Musk predicted “positive GAAP net income and positive cash flow in Q3 and Q4” — a statement that left some observers scratching their heads. In addition to the restructuring, Musk said Tesla would not renew its residential sales agreement with Home Depot; instead, the company’s solar power arm will focus on selling its wares online and in Tesla stores. The partnership, announced in February, involved 800 stores.

“The majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations,” he said, promising “significant” salary and stock vesting for employees let go.

Tesla employed a workforce of approximately 37,500 at the end of 2017, Bloomberg reports.