Published: Tue, June 12, 2018
Money | By Ralph Mccoy

Tesla to Cut 9% of Workers Across Company

Tesla to Cut 9% of Workers Across Company

The layoffs at Elon Musk's electric auto company come as it tries to increase production of its Model 3 sedan and turn a quarterly profit this year. "We made these decisions by evaluating the criticality of each position, whether certain jobs could be done more efficiently and productively, and by assessing the specific skills and abilities of each individual in the company", Musk said.

Tesla has never been profitable in its 15-year existence.

"We are a small company in one of the toughest and most competitive industries on Earth", Musk wrote. The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.

The San Jose Mercury News, which first reported the firings, said the departures included "engineers, managers and factory workers". Moreover, he said that this round of layoffs is necessary so that "we never have to do this again".

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"9 percent job cut is a good number and I don't think there will be more job cuts in the near term", Efraim Levy, analyst at CFRA Research said. Tesla still has a significant need for production workers as it tries to reach Model 3 manufacturing targets, he wrote in the email.

Following the announcement, Electrek has now learned of a round of layoffs currently ongoing at Tesla, which could see as much as 9% of the workforce leave the company.

In addition to this company-wide restructuring, we've decided not to renew our residential sales agreement with Home Depot in order to focus our efforts on selling solar power in Tesla stores and online. At the time, Tesla had 33,000 employees, suggesting that Tesla's headcount is still on an upward trajectory overall. Each time, after a few quarters of small profits, Tesla would ramp up production of another auto model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

Up almost 7 percent earlier on Tuesday, shares of the company trimmed gains to stand 3.5 percent higher at $344 by early afternoon.

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