Tesla Inc (NASDAQ: TSLA)
CEO Elon Musk, in an email to employees, wrote “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 says the cuts were made almost entirely from salaried employees and that those working on Model 3 production will not be affected so that the company will still be able to reach its target goal in the upcoming months.
While there are job cuts, he also announced in the same email that the company is hiring for key positions and is looking to increase production staff.
Musk explains that the job cuts are necessary if they want to reach their goal of a world transition to sustainable, clean energy, since they must demonstrate that the company can be sustainably profitable due to the fact that they have not made an annual profit in the almost 15 years that they have existed.
The email also adds that the job cuts are part of a restructuring plan and that by making these job cuts, the company should finally be profitable. The restructuring includes the decision to not renew their residential sales agreement with home Depot in order to focus their efforts towards selling solar power in Tesla stores and online. In order to compensate for this decision, Tesla employees working at Home Depot will be offered the opportunity to move to Tesla retail locations.
Tesla currently employs about 46,000 people, which equates to approximately 4,000 job cuts.
“It is very difficult to say goodbye,” says Musk in the email. “In order to minimize the impact, Tesla is providing significant salary and stock vesting to those we are letting go,” he added. According to the email, the compensation to those that are being laid off will be proportionate to the time they have spent with the company.