Tesla said Tuesday that it will cut thousands of jobs, aiming to improve its finances amid a period of torrential losses as it accelerates production of its newest electric vehicle.
Tesla CEO Elon Musk confirmed the company is shedding about 9 percent of its workforce — “almost entirely” salaried employees but not production-line workers, according to an internal email he posted to Twitter.
The company had 37,543 full-time employees as of Dec. 31, according to a public filing. At that level, 9 percent would equal nearly 3,400 jobs.
The company, based in Palo Alto, California, also plans to end its deal to sell solar panels at home improvement chain Home Depot. Instead, Tesla will focus on selling solar power through its own stores.
The moves come as Musk is facing pressure to ramp up output of the new Model 3 electric sedan and show bottom-line profitability.
Musk said the cuts would not affect the company’s ability to speed up production.
“Tesla has grown and evolved rapidly over the last 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,” he told workers in the email.
Tesla representatives were not immediately available for further comment.
“The pressure is on for Tesla to cut the red ink as the third quarter approaches,” AutoPacific analyst Dave Sullivan said. “Cutting your way to profitability as you try to grow and launch vehicles is very difficult. It’s hard to believe Tesla had enough fat to trim in their salaried ranks. I expect Musk to push and pull more levers in the next few months as the push for profits continues.”
Musk said the cuts won’t slow the rate of production, which is happening at Tesla’s assembly plant in California and its battery factory in Nevada. Delays at each operation have prevented the company from rapidly fulfilling paid customer reservations for the Model 3.
“It’s notable that they left the production teams alone because it’s vital that they get the Model 3 production rolling,” Autotrader analyst Michelle Krebs said.
Musk said June 5 that it’s “quite likely” the company will reach its goal of making 5,000 Model 3 cars a week by the end of the month.
Since then, Tesla shares have gained nearly 18%, closing Tuesday at $342.77. The historically volatile stock had been in a slump since late March, when it briefly dipped below $250 as investors grew concerned about Model 3 production delays, Tesla spending and safety investigations.
The automaker has lost more than $1.7 billion over its last four complete quarters, raising the financial stakes for the compact car.
“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,” Musk said in the email. “That is a valid and fair criticism of Tesla’s history to date.”
Tesla’s growth has made the company the pre-eminent maker of electric vehicles. But it has come at a steep cost.
Musk has admitted several mistakes with Tesla, including too much automation on the production line and an “out of control” network of third-party contractors.
“So we’re going to scrub the barnacles on that front. It’s pretty crazy,” Musk said on a conference call in May. “You’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”
Musk has also lashed out against the media in recent weeks, criticizing many reporters as unethical and blasting what he perceives as unfair scrutiny of Tesla’s partially self-driving vehicle technology.
The Home Depot agreement that’s ending involved sales of Tesla solar-energy products at about 800 stores. Tesla employees based at those locations will be removed.
“Our relationship with Tesla will continue through the end of the year, but this change doesn’t affect our plans to continue offering solar options to our customers,” Home Depot spokesman Stephen Holmes said.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.