Tesla will cut 9% of its workforce to “eliminate bureaucracy and move faster”

Tough decisions
Tough decisions
Image: Hannah McKay/Reuters
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Tesla is cutting 9% of its 46,000-strong workforce after a restructuring to streamline the company, CEO Elon Musk announced today (June 12).

Almost all of the jobs are salaried positions, Musk said. Cuts will not affect factory workers and “production associates” crucial to manufacturing the Model 3 and Tesla’s hope of turning an annual profit for the first time in 2018.

“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 a letter to all employees. “We are also continuing to flatten our management structure to help us communicate better, eliminate bureaucracy and move faster.” The company would also end its residential sales agreement with Home Depot to sell more solar panels and battery storage in Tesla stores and online.

Some changes were expected. On May 14, Musk sent a letter to employees (paywall) saying he was “flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.” Musk had also promised to slash the number of contractors at Tesla, which he had compared to “barnacles.”

Musk said Tesla would offer laid-off employees stock vesting based on their length of employment. Tesla’s stock price remained mostly unchanged for the day.