Tesla is cutting 9% of its staff, seeks profitability first
This will affect around 3,500 of the company's over 40,000 employees.
Musk said that the job cuts will be focused on salaried employees, not factory workers, and will also not affect any production associates.
Here is more.
Tesla firing 9% of its workforce
Tesla hopes to be profitable for first time this year
In its 15-year history, Tesla has cumulatively lost about $5.4 billion, and analysts estimate that the company might lose another $1.3 billion in the next four quarters.
The decision to lay off employees could actually save Tesla about $80 million a quarter going forward.
Notably, Tesla recorded over 37,500 employees last year, which was 12 times higher than its workforce five years earlier.
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Tesla's bungled first attempt to mass-produce an electric vehicle
The move also comes at a time when Tesla is struggling at its first attempt to mass-produce an electric vehicle.
The company was to reach the goal of producing 5,000 units of its Model 3 sedan per week last year, something which it now hopes to achieve by June-end.
However, Musk said the layoff won't "affect the ability to reach Model 3 production targets."
Here is why Tesla needs to save up money
In addition to focusing on the production of the Model 3, Tesla needs to spend on building new car and battery factories in China and Europe in the near future.
Further, the company is expected to launch a crossover, sports car, and semi truck in the coming years as well.
According to analysts, Tesla might need to seek $10 billion in funding by 2020.
This is the largest layoff in Tesla's 15-year history
"What drives us is our mission to accelerate the world's transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable," Musk said in an e-mail he sent to employees announcing the layoffs.