Tesla shifts gear and confirms plans to cut 9pc of workforce

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Elon Musk says hard decisions are necessary now in order to keep Tesla driving at full throttle.

Electric car company Tesla is to lay off around 9pc of its staff, amounting to about 4,100 layoffs as the company reorganises.

Tesla employs 46,000 people and had taken on 8,000 workers since the start of the year.

‘We are making this hard decision now so that we never have to do this again’
– ELON MUSK

In the middle of May, CEO Elon Musk said that the company was planning a reorganisation and would flatten its management structure.

It is understood that the cuts will affect mostly salaried employees. The layoffs won’t affect production of the Model 3 as no production staff are being cut.

Getting Model 3 up to 5,000 units per week

Tesla has been striving to reorient itself to get Model 3 production on track to achieving a goal of building 5,000 vehicles per week.

In a tweet, Musk described the cuts as “difficult, but necessary”.

In a letter to employees, Musk said: “To be clear, Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel.

“I also want to emphasise that we are making this hard decision now so that we never have to do this again.”

In May, it emerged that Tesla burned through about $710m in cash in Q2 despite reporting impressive revenues of $3.2bn. This was mainly due to manufacturing issues associated with the Model 3, which has a starting price of $35,000. During that quarter, it had only reached a peak of 2,270 units per week.

Tesla told shareholders that if it can bring Model 3 production volume to 5,000 units per week, it can grow gross margin to pass the break-even point in Q3.

Steering wheel of a Model 3 Tesla. Image: Christopher Lyzcen/Shutterstock



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