By on June 12, 2018

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.

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24 Comments on “Tesla’s Workforce Haircut Takes 9 Percent Off the Top...”

  • avatar

    I wonder if this will cause any delays in the launch of the semis, rocket powered sports car, small cross-over, solar powered shingles,…

    • 0 avatar

      ….. and the tunnels, flamethrowers etc…

      I really want an American success story for an independent electric car company. Unfortunately, Musk is a promoter not a builder. The company was not built on a real foundation of solid capital. It is a house of cards built with Govt. subsidies, false promises, a factory located in the most expensive location in the country and its customer base is a very limited demographic.

      Horsepower, marketing buzz and environmental virtue signaling cures many things. Eventually poor build quality, flimsy suspensions, over hyped auto pilot systems, massive amounts of warranty work finally caught up with Tesla.

      I know other auto makers have product ready to go but are holding out ’till T bites the dust and will scoop up the fat.

      • 0 avatar
        SCE to AUX

        “…its customer base is a very limited demographic”

        So is that of Mercedes, and they move a lot of cars.

      • 0 avatar

        “but are holding out ’till T bites the dust and will scoop up the fat.”

        They’re not holding back one bit. We’ve already got the iPace with the Porsche Taycan getting ready for production and the Mercedes EQC joining it. Mercedes just released video of their working EQA prototype being driven around. I think I read somewhere that GM was expanding Bolt production as well. Alfa Romeo has the Alfieri coming too. VW and Audi have cars coming as well.

        The competition is going to be tough too. The interiors of the competition is amazing. Porsche has CCS-2 ultrafast charging as well.

    • 0 avatar

      Don’t forget the candy company.

  • avatar

    Where is Deadwood when you want him? I would almost pay for his analysis.

  • avatar

    Next Musk will have to sell his Amazing Fantasy #15 and have his cable turned off.

  • avatar
    SCE to AUX

    “…setback-plagued Model 3 production process”

    Sure, but 1 in 3 BEVs sold YTD is a Model 3 and 2 in 3 BEVs sold YTD is a Tesla.

    Tesla owns the market, setbacks and all.

    • 0 avatar

      And Tesla claims that the model 3 is the best selling mid-size premium sedan:

  • avatar
    Robert Fahey

    Good. Showing a profit will help its borrowing rates and open up capital markets. Both will facilitate new models.

    • 0 avatar

      I don’t think there will be more models until they build more capacity. They may have more room at GF1 for more battery packs, but EM has said they will need no capital raise and the Model Y won’t be built on the Model 3 line and they have about 2 billion owed in early 2019. Hard to understand how all of this will come together.

      Maybe higher $$ deposits for Model Y?

  • avatar

    This is after one of the most ridiculous pay packages for a CEO of any company. $2.6 billion

    It’s funny what Elon Musk gets away with because he builds electric cars

  • avatar

    At Tesla it certainly takes a lot of employees to build not that many cars. They are approaching British Leyland levels of productivity with over 37,000 employees building around 30,000 cars in Q1 2018. No wonder they don’t make money.

    • 0 avatar

      Remember, they don’t have dealers. That adds to the numbers. Not everyone is building cars.

      • 0 avatar

        Bingo – a big reason that the traditional automakers don’t want a direct sales model: it will add a significant cost structure to their business.

    • 0 avatar

      I want to point out that Musk quietly admitted that the losses are from the Solar CIty division. In his announcement he said this will impact Solar sales so I think he’s laying off the people in the Solar division.

      More proof that the Solar City acquisition was more about saving Musk and his cousin’s investment and not about making Tesla profitable.

  • avatar

    Tesla is nothing more than a failed company that made very low quality and dangerous fashion accessories. They’ve done nothing to innovate, nothing to get electric cars into more hands, and they haven’t turned a profit in 15 years.

    This is yet another nail in the coffin.

  • avatar

    Easy to play Monday morning quarterback, but if Tesla had invested a third the resources they’ve plowed into Model 3 capacity (can’t call it ‘production’ yet) into debugging their expensive actual offerings over same time period they’d be sitting pretty – even with the truck-and-roadster adventure. They’d be selling much higher quality examples of their same two whips, and at a far better operating margin.

    As it is, they’re scraping cupboards and the couch for all the change trying to get a low-margin volume thing from eating their entire company – just as real competitors from Europe show up in Tesla’s high-margin biz.

    Another emerging wild-card for Tesla is the Solar City millstone – China’s subsidy adjustment last week mauled equity of the whole sector – springing unforeseen leaks on Tesla’s balance sheet far from the cars where fewer analysts tread.

  • avatar


    Hold on.

    They are doing 9% layoffs of 37,000 employees. = what 3500 folks?

    But, all will be whiteshirts. So,if they employ 1 salaried for every 5 hourly (usually closer to 1:10 at the big 3), that means they are killing off ONE HALF of all salaried. So therefore only one of 3 things can be true:

    1 my numbers are off.
    2 the story is Bullshirt
    3 tesla is DOOMED

    • 0 avatar

      Its the Sales and Management from Solar City.

      This is Phase 3 of his acquisition of his own company using Shareholder money.

      Phase 2 was declaring Solar City is performing well even though the numbers were weak.

      Phase 1 was getting approval to use stockholder money to bail out himself and his cousin.

  • avatar

    “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….”

    First things first, Musk.

  • avatar

    Of course Musk’s absurd pay package isn’t touched. If they want to save money, they can pay the CEO based on profitability. But, no, that would make too much sense.

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