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  HOME | Business & Economy (Click here for more)

Elon Musk: Tesla to Lay Off 9% of Its Workers

WASHINGTON – Tesla CEO Elon Musk announced on Tuesday that the luxury auto manufacturing firm will lay off 9 percent of its workforce to show that it can be profitable after being unable to move into the black so far in the 15 years since it was founded.

Musk sent a letter to Tesla employees saying that “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 associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months,” he added, referring to the firm’s premier electric vehicle.

The measure means that some 4,100 of the firm’s 46,000 employees will lose their jobs, although the layoffs will not affect operations at the factory producing the Model 3.

The firm’s billionaire founder also told Tesla employees that the company will not renew the agreement it has with Home Depot to rent space at some 800 of the latter’s stores to sell its home solar panel products.

Musk said that “In order to minimize the impact, Tesla is providing significant salary and stock vesting (proportionate to length of service) to those we are letting go,” and – regarding the massive layoffs, he added that he was “making this hard decision now so that we never have to do this again.”

In May, Musk announced a significant reorganization of Tesla in the face of the economic difficulties it was facing and inability to turn a profit.

Tesla’s losses increased by 97.5 percent to just under $785 million in the first quarter of 2018, despite the fact that earnings rose by 26.4 percent to more than $3.4 billion.

Musk has denied that the firm was having financial problems, although key sector analysts have said that Tesla has been rapidly consuming its capital reserves and will probably need cash to stay afloat by the end of this year or the beginning of 2019.

 

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