Tesla to layoff 9 percent of workforce

Tesla to layoff 9 percent of workforce

Tesla to layoff 9 percent of workforce

"As part of this effort, and the need to reduce costs and become profitable, we have made the hard decision to let go of approximately 9 percent of our colleagues across the company", the email read.

Tesla Inc (TSLA.O) is cutting several thousand jobs across the company as it seeks to reduce costs and become sustainably profitable without endangering the critical ramp up of production of its Model 3 sedan. The firm has a sector weight rating and a $300 "fair value" price target on Tesla shares, which were up about 4% in pre-market trade Tuesday.

Tesla will provide "significant" salary and vesting stock to employees being dismissed, Musk said.

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.

Shares of Tesla were up about 3.8% at the time of writing.

As many as 9% of Tesla's workforce will be let go.

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

In the note, which he tweeted out after it was leaked to media outlets, Musk said that almost all of the cuts would be salaried positions, and that the production staff is largely unaffected. Each time, after a few quarters of small profits, Tesla would ramp up production of another vehicle model-first the Model X, then the Model 3-and rack up more big losses, as this chart from Bloomberg shows.

The delays and higher costs have put Tesla into risky territory where it is rapidly running out of cash and investors have become nervous about lending the company more money.

In addition to this company-wide restructuring, we've decided not to renew our residential sales agreement with Home Depot in order to focus our efforts on selling solar power in Tesla stores and online. Tesla is up 11.3% this year. The company is now producing just under 3,000 per week, Bloomberg estimates.

Tesla has promised to hit a 5,000-cars-per-week production target for the Model 3 by the end of this month. It can easily top $50,000 with options.

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