Tesla to cut staff by 9 percent in drive for profitability

2016 Tesla Model S P90D Front Badge

"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 hard to justify today".

US electric vehicle giant Tesla is laying off nine per cent of its workforce, the company announced on Tuesday.

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.

The move coincided with a significant jump in Tesla's stock price following a report from Keybanc Capital Markets that it increased its second-quarter production outlook for the Model 3 by 50 percent. But Tesla had 37,543 full-time employees at the start of the year and has hired more since then.

"Given that Tesla has never made an annual profit in the nearly 15 year since we have existed, profit is obviously not what motivates us".

At the same time, the job cuts announced today will reduce Tesla's costs, allowing the company to reach profitability more easily.

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Following the news, Tesla stock climbed more than 6%.

Musk said that the layoffs do not affect production staff and stressed that this wouldn't hurt the company's efforts to hit big targets for production of the Model 3 sedan.

Musk wrote in the email that the company will never achieve its mission to help move the world to cleaner energy "unless we eventually demonstrate that we can be sustainably profitable". For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network.

Tesla also said it was not renewing its residential sales agreement with retailer Home Depot in order to focus on selling solar power in Tesla stores and online.

The number of Tesla employees has grown 15% in the past six months, according to insiders.

To those who are departing, thank you for everything you've done for Tesla and we wish you well in your future opportunities.

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