On Tuesday CEO Elon Musk announced the automaker is reducing its workforce by 9 percent in an effort to cut costs and become profitable.
While Musk didn’t mention how many employees specifically will be let go, Tesla’s annual filing from December 2017 showed it had 37,543 full-time employees. Rough math indicates that around 3,400 employees will be looking for new jobs in the near future.
Tesla has failed to ever turn a profit in its nearly 15 years of business, and Musk noted this fact in a company-wide email he posted to Twitter.
Difficult, but necessary Tesla reorg underway. My email to the company has already leaked to media. Here it is unfiltered: pic.twitter.com/4LToWoxScx
— Elon Musk (@elonmusk) June 12, 2018
“The cuts are “difficult, but necessary” he tweeted. Musk also noted that no production workers would be cut so Model 3 production wouldn’t be affected, and that most of the cuts would come from the salaried workforce.
Musk also announced Tesla will not renew a residential sales agreement it had with Home Depot. The decision was made so Tesla can focus its efforts on selling solar power in its own stores and online, and the majority of employees working at Home Depot stores will be given the opportunity to move over to Tesla retail locations.
Tesla has faced numerous production woes as it attempts to ramp up Model 3 production to 5,000 units per week while missing deadline after (self-imposed) deadline. Musk stated last week he now believes the 5,000-unit per week goal will be met at the end of June, with the ability to hit 10,000 units per week next year.
While Musk said in his email announcement that these cuts will not affect Model 3 production, it could affect development of the forthcoming Model Y, Roadster, and/or Semi.
Last week Tesla revealed details regarding the upcoming Model Y crossover SUV during a shareholders meeting, including a reveal next year and the likelihood that it will be built in a new plant.
This effort to become more lean, cut costs, and increase the ability to become profitable comes at a time when Tesla faces new competition from Porsche, Jaguar, and others.