Tesla (TSLA.O) cuts nine per cent of staff as Elon Musk aims at profitability

Electric car maker Tesla is cutting several thousand jobs across its workforce in a bid to reduce its costs as it ramps up production on the Model 3, chief executive Elon Musk confirmed in a tweet last night.

In an email sent to staff, Musk said the cuts, equivalent to about nine per cent of staff, had been preplanned as part of a “thorough reorganisation” of Tesla’s management structure.

The company adjusted its production targets for the Model 3 down to 5,000 cars per week, to be reached by the end of June.

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

“These cuts were almost entirely made from our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”

Musk also said an existing residential sales agreement with US chain Home Depot will not be renewed, and it would refocus on sales through its own channels.

Analysts expect Tesla to begin raising fresh capital later this year, despite statements from Musk that he expects it to hit profitability within the third or fourth quarter.

Tesla’s share price rose by 3.21 per cent to $342.77 at market close.