Shares of Tesla sank about three percentage points from their intra-day high on Tuesday after Electrek reported the company was planning to lay off over 3,000 employees - or roughly 9% of its workforce. "These cuts were nearly entirely made from our salaried population and no production associated were included, so this will not affect our ability to reach Model 3 production targets in the coming months".
Musk called the job cuts, which will affect about 9% of the company's more than 40,000 employees, "difficult, but necessary" in a tweet that contained the email he had sent to employees announcing the layoffs.
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".
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Tesla employed more than 37,000 people at the end of a year ago.
While Musk didn't mention how many employees specifically will be let go, Tesla's annual filing from December 2017 showed it had 37,543 full-time employees. Tesla also evaluated each workers' "specific skills and abilities" as part of its restructuring effort. He added that affected employees will receive "significant salary and stock vesting", proportionate to the time they spent at the company.
Musk set the goal of producing 5,000 Model 3s per week by the end of the month, and Consumer Edge Research Analyst Jame Albertine said this move is viewed as a "positive in helping Tesla track toward profitability". According to Bloomberg, this is the largest layoff in Tesla's 15-year history. "It is very hard to say goodbye", the CEO wrote. Tesla will, however, continue to take on new staff, as a "significant need for additional production personnel" remains within the company.
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