Tesla's workforce has grown at an incredible pace since the acquisition of SolarCity, which pushed Tesla's total headcount to over 30,000 employees. This is part of the reorganization Musk talked about in May on the company's quarterly earnings call.
Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us.
While that email was sent only to employees, Musk then tweeted the full text immediately afterwards and it is clear that the missive was created to be read by external critics and anxious investors. While the automaker has struggled with its ramp up, CEO Elon Musk said last week that the company could begin churning out 5,000 vehicles per week by the end of the month, a target it set out to hit by the end of the second quarter. At the same time, the job cuts announced today will reduce Tesla's costs, allowing the company to reach profitability more easily.
The "majority" of those workers will be offered positions in Tesla's retail business, Mr Musk added.
Tesla has been under increasing pressure in recent months over its slow rollout of the Model 3 - which is meant to be Tesla's mainstream market offering. Instead, he said that the cuts were made to job functions that, "are hard to justify today". The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.
"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 can eventually demonstrate that we can be sustainably profitable".
In addition to the restructuring, Tesla won't renew a residential sales agreement with Home Depot Inc. and focus instead on selling solar power in its own stores and online, Musk wrote. In order to minimize the impact, Tesla is providing significant salary and stock vesting (proportionate to length of service) to those we are letting go. He says there's still a significant need for additional production workers.