It’s hard to know the upshot of Tesla’s move to cut 9% of its workforce, or around 3,500 employees, other than it is another humbling moment for CEO Elon Musk in what has been a year full of technical setbacks and critical press.
Tesla stock had jumped 7% this morning amid an analyst report saying the company appeared to be doing better in terms of increasing the pace of producing its flagship Model 3 sedan, but the gain dropped to around 3% following the layoffs announcement. We don’t know yet which units will be most affected, but Musk said it would involve salaried employees and that Model 3 production wouldn’t get hit. The company’s delays in producing the Model 3 at a high clip are probably what contributed to the decision to cut jobs, as the company blew through lots of money in the process.
Musk said Tesla needed to “demonstrate that we can be sustainably profitable” in order to achieve its objective of reducing fossil fuel consumption, even though “profit is obviously not what motivates us.”
As part of the move, Tesla is pulling the plug on its effort to sell solar charging products at Home Depot stores.