Elon Musk continues shaking up Tesla. The CEO now announced that his “reorg” will effectively see 9 percent of their workforce laid off. The cuts have already been made. Musk claimed Tesla needed this cost reduction to prove they are on a sustainable mission, that is profitable.
Tesla employees just found another email in their mailboxes this week with the subject “Reorg Update”. It was leaked to media and subsequently tweeted. In it Musk announced a huge wave of redundancies that will effectively claim one in 10 employees almost.
Reads the email: “We have made the difficult decision to let go of approximately 9% of our colleagues across the company. These cuts were almost entirely made from our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”
Elon Musk then said Tesla had not been profitable for 15 years so that “profit is obviously not what motivates us”. It is the drive for a transition to clean energy instead, so the CEO claims, before adding that they needed to demonstrate their profitability eventually in order to make that transition.
The move had been expected although not to this extent. In an earlier email Musk had announced a “thorough reorganisation” of the company that would involve management as well. In May, the email read: “As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.”
After merging with SolarCity, Tesla employed about 30,000 people with some duplicate positions. This latest lay off thus results in about 3,000 workers being made redundant.
Still Tesla will continue to hire, particularly for the shop floor. Says Musk in his last email: “To be clear, Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel. I also want to emphasise that we are making this hard decision now so that we never have to do this again.”
The move follows a similar action when Musk reviewed contractors earlier this year. Those that remained had to have a Tesla employee vouching for them (we reported).
In his latest email, the CEO also cancelled the renewal of their contract with Home Depot to sell its Tesla Walls at their stores. According to Musk, Tesla is focusing on selling its solar products through its own stores.
twitter.com (original tweet with email)