Tesla announced Tuesday it planned to lay off up to nine percent of its workforce, a move that could eliminate thousands of its roughly 40,000 employees.
In a company-wide email, chief executive Elon Musk described the decision as “restructuring” and said it would affect only salaried employees — not the factory workers building its next fleet of Model 3 electric cars.
“Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are difficult to justify today,” Musk wrote.
The cuts come as the company aims to shrink costs and become profitable, Musk said.
Last week, Musk overcame an attempt to strip him of his role as chairman of Tesla’s board, a plan introduced by a company shareholder who raised doubts about Musk’s ability to manage multiple companies simultaneously.
Afterward an emotional Musk appeared to signal brighter days ahead for the Tesla when he predicted the company would begin pushing out 5,000 Model 3s per week by the end of June.
He also predicted Tesla would be profitable in Q3 and Q4.
“One of the biggest mistakes we made was trying to automate things that are super easy for a person to do, but super hard for a robot to do,” he said.
In October, Tesla fired “hundreds of workers” following annual performance reviews. The company said the firings involved non-manufacturing positions and were unrelated to production delays involving the Model 3.
The San Jose Mercury News, which first reported the firings, said the departures included “engineers, managers and factory workers.” Employees told the paper that they received “little or no warnings” before the firings, which reportedly targeted 400 to 700 employees, leading to “lowered morale through many departments.”
Tesla has struggled in recent months to resolve nagging production issues surrounding the Model 3 roll-out.
Despite glowing reviews and a cult-like following of eager buyers, new Model 3s have trickled out of Tesla’s factories months behind schedule.
The cuts were a sign that Tesla is under increasing pressure to show a profit, said Michelle Krebs, executive analyst for the online car marketplace Autotrader.
“Tesla has signaled organizational changes in recent weeks and here it is,” Krebs said. “It is clear that Tesla is under tremendous pressure to finally turn a profit and is attempting to address it by cutting overhead. Also notable is Tesla is not cutting production jobs at a time when pushing Model 3s out the door is a top priority.”
Tesla has also pushed back against accusations of poor worker safety and discrimination at company facilities, and headline-grabbing wrecks and investigations that have raised questions about the company’s semi autonomous technology.