June 12, 2018
Tesla has lost money every year since its founding in 2003. But the automaker’s chief executive, Elon Musk, is pulling out all the stops to end that streak.
Elon Musk, in Search of Profit, Cuts Teslas Work Force
In the latest sign, Mr. Musk said Tuesday that Tesla would reduce its work force by about 9 percent, or roughly 3,500 of its 37,500 employees, as part of a companywide restructuring.
The cutbacks come in the midst of a challenging and expensive effort to transform Tesla from a niche producer of electric vehicles to a mainstream automaker, an ambition hinging on its first mass-market offering, the Model 3.
In an internal email that he posted on Twitter, Mr. Musk said most of those losing their jobs would be salaried employees. He said the cuts would have no effect on production workers at the company’s car plant in Fremont, Calif. And he emphasized the quest for profitability.
“What drives us is our mission to accelerate the world’s transition to sustainable, clean energy,” Mr. Musk said, “but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date.”
Starting with its Model S sedan and Model X sport-utility vehicle, Tesla has shown it can produce electric cars that command lofty prices. Last year it sold more than 100,000 cars, and it is becoming an increasing threat to German luxury brands like Mercedes-Benz and BMW. Tesla has pointed to May figures showing that its Model 3 outsold the Mercedes C-Class and the BMW 3 Series, two of the top-selling luxury cars in the United States.
But turning a profit soon is a critical task. In the first quarter, Tesla recorded a loss of $785 million on revenue of $3.4 billion. And the company consumed $745 million in cash, up sharply from $112 million in the previous quarter.
Alarmed by the cash burn and the slow ramp-up of Model 3 assembly, Moody’s Investors Service cut Tesla’s credit rating in March.
Tesla’s stock ended the day with a gain of more than 3 percent, closing at $342.77, though it had been trading even higher before the announcement.
But turning a profit soon is a critical task. In the first quarter, Tesla recorded a loss of $785 million on revenue of $3.4 billion. And the company consumed $745 million in cash, up sharply from $112 million in the previous quarter.
Alarmed by the cash burn and the slow ramp-up of Model 3 assembly, Moody’s Investors Service cut Tesla’s credit rating in March.
Tesla’s stock ended the day with a gain of more than 3 percent, closing at $342.77, though it had been trading even higher before the announcement.
Mr. Musk had hinted recently that a thinning of Tesla’s executive ranks was in the works, and in his email he said Tesla had grown rapidly in the last several years, resulting in duplication in some jobs.
He also said Tesla was ending an agreement to sell its solar panels in Home Depot stores.
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