Tesla cuts 9 pct. of workforce in bid to post a profit - KSWO 7News | Breaking News, Weather and Sports

Tesla cuts 9 pct. of workforce in bid to post a profit

By TOM KRISHER
AP Auto Writer

DETROIT (AP) - Electric car maker Tesla Inc. is laying off about 3,600 workers mainly from its salaried ranks as it slashes costs in an effort to deliver on CEO Elon Musk's promise to turn a profit in the second half of the year.

In an email to workers on Tuesday, Musk said the cuts amount to about 9 percent of the company's workforce of 40,000.

Tesla would not say how much money the layoffs would save, but said no factory workers would be affected as the company continues to ramp up production of its lower-priced Model 3 compact car.

The move is part of an organizational restructuring that Musk announced earlier in the year.

"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 wrote in the email. He thanked departing employees for their hard work and said Tesla is providing "significant salary and stock vesting" to those being let go, based on their length of service.

Tesla has not made an annual profit in its 15 years of doing business, and it has posted only two quarterly net profits.

At the company's annual shareholder meeting earlier this month, Musk said he expected the Palo Alto, California, company to post a quarterly profit during the July-September period. For nearly all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network.

It's not the first time Tesla has laid off workers. The company let go of 400 to 700 workers last fall after completing annual performance reviews, and it laid off a small number of workers back in 2008.

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."

The company is making the move now so it never has to do it again, he wrote. Tesla still has a significant need for production workers as it tries to reach Model 3 manufacturing targets, he wrote in the email.

The layoffs come in engineering, sales and other front-office functions, but the company says the remaining workforce is large enough to accomplish Musk's lofty goals of rolling out a semi, pickup truck and a new SUV in the coming years.

Tesla shares rose 2.5 percent to $340.34 in afternoon trading, after reaching as high as $354.97 around noon.

Musk also announced that the company's solar panel unit has decided to end its agreement to sell via Home Depot stores so it can focus on sales in Tesla's company stores and online. A majority of Tesla employees working at Home Depot will get offers to work in Tesla's own stores.

Consumer Edge Research Analyst James Albertine wrote in a note to investors that he views the moves "as a positive in helping Tesla track toward profitability later this year."

He wrote that reaching Musk's Model 3 production goal of 5,000 vehicles per week by the end of June is still the primary driver of profitability. "A focus on 'getting lean' is a positive with respect to Tesla's guidance for achieving consolidated profitability in 2018, in our view," he wrote.

The Model 3 starts at $35,000, but lower-priced configurations are not available yet. It can easily top $50,000 with options.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • InternationalMore>>

  • The Latest: More than 300 injured in Osaka-area earthquake

    The Latest: More than 300 injured in Osaka-area earthquake

    Sunday, June 17 2018 10:20 PM EDT2018-06-18 02:20:10 GMT
    Monday, June 18 2018 7:31 AM EDT2018-06-18 11:31:09 GMT
    (Kyodo News via AP). Smoke rises from a house blaze in Takatsuki, Osaka, following an earthquake Monday, June 18, 2018.  A strong earthquake shook the city of Osaka in western Japan on Monday morning, causing scattered damage including broken glass and...(Kyodo News via AP). Smoke rises from a house blaze in Takatsuki, Osaka, following an earthquake Monday, June 18, 2018. A strong earthquake shook the city of Osaka in western Japan on Monday morning, causing scattered damage including broken glass and...
    Japanese disaster authorities say two people have been found without vital signs and 41 others injured by an earthquake in western Japan.
    Japanese disaster authorities say two people have been found without vital signs and 41 others injured by an earthquake in western Japan.
  • Strong quake near Osaka, Japan, kills 3, knocks over walls

    Strong quake near Osaka, Japan, kills 3, knocks over walls

    Sunday, June 17 2018 9:29 PM EDT2018-06-18 01:29:52 GMT
    Monday, June 18 2018 7:31 AM EDT2018-06-18 11:31:03 GMT
    (Takaki Yajima/Kyodo News via AP). School children take shelter at schoolyard in Ikeda, Osaka, following an earthquake Monday, June 18, 2018.  A strong earthquake has shaken the city of Osaka in western Japan. There are reports of scattered damage incl...(Takaki Yajima/Kyodo News via AP). School children take shelter at schoolyard in Ikeda, Osaka, following an earthquake Monday, June 18, 2018. A strong earthquake has shaken the city of Osaka in western Japan. There are reports of scattered damage incl...

    A strong earthquake shook the city of Osaka in western Japan, causing scattered damage including broken glass and partial building collapses.

    A strong earthquake shook the city of Osaka in western Japan, causing scattered damage including broken glass and partial building collapses.

  • Colombia's president-elect seeks unity after polarizing vote

    Colombia's president-elect seeks unity after polarizing vote

    Monday, June 18 2018 12:10 AM EDT2018-06-18 04:10:09 GMT
    Monday, June 18 2018 7:30 AM EDT2018-06-18 11:30:33 GMT
    (AP Photo/Fernando Vergara). President Elect Ivan Duque shakes hands with supporters after his victory in the presidential runoff election in Bogota, Colombia, Sunday, June 17, 2018. Duque defeated Gustavo Petro, a former leftist rebel and ex-Bogota ma...(AP Photo/Fernando Vergara). President Elect Ivan Duque shakes hands with supporters after his victory in the presidential runoff election in Bogota, Colombia, Sunday, June 17, 2018. Duque defeated Gustavo Petro, a former leftist rebel and ex-Bogota ma...
    Colombia's President-elect Ivan Duque is appealing for unity after winning a runoff election over a leftist firebrand whose ascent shook the country's political establishment and laid bare deep divisions over the...
    Colombia's President-elect Ivan Duque is appealing for unity after winning a runoff election over a leftist firebrand whose ascent shook the country's political establishment and laid bare deep divisions over the nation's peace process.
  • NationalMore>>

  • Hundreds of children wait in Border Patrol facility in Texas

    Hundreds of children wait in Border Patrol facility in Texas

    Sunday, June 17 2018 3:40 PM EDT2018-06-17 19:40:11 GMT
    Monday, June 18 2018 7:30 AM EDT2018-06-18 11:30:42 GMT
    Nearly 2,000 children have been taken from their parents since Attorney General Jeff Sessions announced the policy. (Source: CNN)Nearly 2,000 children have been taken from their parents since Attorney General Jeff Sessions announced the policy. (Source: CNN)

    Hundreds of children are waiting away from their parents inside a Border Patrol holding facility in South Texas, with groups of 20 or more children to a single cage.

    Hundreds of children are waiting away from their parents inside a Border Patrol holding facility in South Texas, with groups of 20 or more children to a single cage.

  • 5 dead as SUV chased by Border Patrol crashes in South Texas

    5 dead as SUV chased by Border Patrol crashes in South Texas

    Sunday, June 17 2018 5:39 PM EDT2018-06-17 21:39:41 GMT
    Monday, June 18 2018 7:30 AM EDT2018-06-18 11:30:21 GMT
    A sheriff says at least five people are dead and several others hurt as an SUV carrying more than a dozen people crashed while fleeing from Border Patrol agents in South Texas.
    A sheriff says at least five people are dead and several others hurt as an SUV carrying more than a dozen people crashed while fleeing from Border Patrol agents in South Texas.
  • 'Incredibles 2' crushes animation record with $180 million

    'Incredibles 2' crushes animation record with $180 million

    Sunday, June 17 2018 11:29 AM EDT2018-06-17 15:29:36 GMT
    Monday, June 18 2018 7:20 AM EDT2018-06-18 11:20:38 GMT
    (Disney/Pixar via AP). This image released by Disney Pixar shows a scene from "Incredibles 2," in theaters on June 15.(Disney/Pixar via AP). This image released by Disney Pixar shows a scene from "Incredibles 2," in theaters on June 15.

    Disney and Pixar's "Incredibles 2" has broken the record for the best animated opening of all time and the biggest for a PG-rated film.

    Disney and Pixar's "Incredibles 2" has broken the record for the best animated opening of all time and the biggest for a PG-rated film.

Powered by Frankly