Tesla cutting 9% of workforce and Home Depot deal, CEO Elon Musk says

Tesla said Tuesday that it will cut thousands of jobs, aiming to improve its finances amid a period of torrential losses as it accelerates production of its newest electric vehicle.

Tesla CEO Elon Musk confirmed the company is shedding about 9 percent of its workforce — “almost entirely” salaried employees but not production-line workers, according to an internal email he posted to Twitter.

The company had 37,543 full-time employees as of Dec. 31, according to a public filing. At that level, 9 percent would equal nearly 3,400 jobs.

The company, based in Palo Alto, California, also plans to end its deal to sell solar panels at home improvement chain Home Depot. Instead, Tesla will focus on selling solar power through its own stores.

The moves come as Musk is facing pressure to ramp up output of the new Model 3 electric sedan and show bottom-line profitability.

Musk said the cuts would not affect the company’s ability to speed up production.

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Elon Musk CEO of SpaceX, speaks to the media during a press conference after the Falcon Heavy Launch on Feb. 6, 2018.  CRAIG BAILEY/FLORIDA TODAY VIA USA TODAY NETWORK

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Tesla founder Elon Musk presenting the new Roadster electric sports vehicle (on background), presented to media on Nov. 16, 2017 at Tesla’s Los Angeles design center. Tesla says the Roadster will accelerate from 0-60 mph in less than two seconds. Tesla says the new Roadster will cost $200,000 and will be released in three years.  /TESLA HANDOUT VIA EPA-EFE

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PayPal Chief Executive Officer Peter Thiel, left, and founder Elon Musk, right, pose with the PayPal logo at corporate headquarters in Palo Alto, Calif., on Oct. 20, 2000. Elon Musk made his fortune off PayPal. Online auction giant eBay Inc. announced Monday, July 8, 2002, it would buy the electronic payment facilitator for more than $1.3 billion in stock.   PAUL SAKUMA/ASSOCIATED PRESS

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SpaceX CEO Elon Musk congratulates teams competing on the Hyperloop Pod Competition II at SpaceX’s Hyperloop track in Hawthorne, Calif on Aug. 27, 2017. A committee of the Los Angeles City Council on April 18, 2018, approved an environmental review exemption for a Los Angeles-area tunnel that Elon Musk wants to dig to test a novel underground transportation system.  DAMIAN DOVARGANES/AP

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SpaceX’s newest rocket, the Falcon Heavy, the most powerful rocket in the world, lifts off on it first demonstration flight. The rocket leapt off Pad 39A at the Kennedy Space Center in Florida at 3:45pm. on Feb. 6, 2018.  CRAIG BAILEY/FLORIDA TODAY VIA USA TODAY NETWORK

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This image from video provided by SpaceX shows Elon Musk’s red Tesla sports car with a dummy driver named “Starman” which was launched into space during the first test flight of the Falcon Heavy rocket on Feb. 6, 2018.  /SPACEX VIA AP

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The twin boosters from SpaceX’s newest rocket, the Falcon Heavy make a successful landing at Landing Zone 1 at Cape Canaveral Air Force Station on Feb. 6, 2018.  CRAIG BAILEY/FLORIDA TODAY VIA USA TODAY NETWORK

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President Trump talks with Tesla and SpaceX CEO Elon Musk, center, and White House chief strategist Steve Bannon during a meeting with business leaders in the State Dining Room of the White House in Washington, Feb. 3, 2017.  EVAN VUCCI/AP

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Tesla Motors CEO Elon Musk speaks about the Interplanetary Transport System which aims to reach Mars with the first human crew in history, in the conference given by Tesla Motors CEO Elon Musk during the 67th International Astronautical Congress in Guadalajara, Mexico on September 27, 2016.  HECTOR-GUERRERO/AFP/GETTY IMAGES

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Tesla Motors CEO Elon Musk unveils the Model X at a launch event in Fremont, Calif on Sept. 29, 2015. The Tesla Motors X is an all-wheel drive SUV featuring a 90 kWh battery providing 250 miles of range and will be able to go from 0 to 60 mph in 3.2 seconds.   ROBERT HANASHIRO/USA TODAY

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CEO and Chief Product Architect of Tesla Motors, Elon Musk shows of his throwback t-shirt of the “Tesla” heavy metal band on January 24, 2015 in Park City, Utah.  LILY LAWRENCE/GETTY IMAGES FOR OCEANIC PRESERVATION SOCIETY

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Elon Musk, Tesla CEO, discusses new technologies before an event for Tesla owners and the media held at the Hawthorne Airport. In the background is a Tesla model P85D.   ROBERT HANASHIRO/USA TODAY

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SpaceX CEO Elon Musk unveils SpaceX’s new seven-seat Dragon V2 spacecraft, in Hawthorne, California on May 29, 2014. The private spaceflight companys new manned space capsule is designed to ferry NASA astronauts to and from the International Space Station. The capsule was named for “Puff the Magic Dragon,” a jab at those who scoffed when Musk founded the company in 2002 and set the space bar exceedingly high. SpaceX went on to become the first private company to launch a spacecraft into orbit and return it safely to Earth in 2010.   ROBYN BECK/AFP/GETTY IMAGES

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Elon Musk CEO, Cofounder, Chief Product Architect for Tesla with a new Model S car outside the Tesla customer delivery area at the Tesla Fremont factory on June 21, 2012.  /JESSICA BRANDI LIFLAND FOR USA TODAY

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Elon Musk, CEO of Tesla Motors, poses with a Tesla car in front of Nasdaq following the electric automakerís initial public offering on June, 29, 2010, in New York.  /MARK LENNIHAN, AP

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Tesla Motors president and CEO Ze’ev Drori, left, and Tesla Motors chairman Elon Musk, right, pose in the Tesla Motors development facility in San Carlos, just south of San Francisco next to a Tesla Roadster on Feb. 19, 2008. The Tesla Roadster, a $99,000 electric sports car powered by laptop computer batteries, is 100 percent electric, can go from 0-60 mph in four seconds and the electric car gets an equivalent of 135 mpg compared to a gas powered vehicle. Production begins mid-March. The car itself is being made in England.  JACK GRUBER/USA TODAY

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Elon Musk stands in front of parts of the first stage of the Falcon 9 rocket at the company’s headquarters in El Segundo, Calif. on Sept. 18, 2007.   DAN MACMEDAN/USA TODAY

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“Tesla has grown and evolved rapidly over the last 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,” he told workers in the email.

Tesla representatives were not immediately available for further comment.

“The pressure is on for Tesla to cut the red ink as the third quarter approaches,” AutoPacific analyst Dave Sullivan said. “Cutting your way to profitability as you try to grow and launch vehicles is very difficult. It’s hard to believe Tesla had enough fat to trim in their salaried ranks. I expect Musk to push and pull more levers in the next few months as the push for profits continues.”

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Tesla reported its worst-ever quarterly loss and said its Model 3 production target remains on track. Aleksandra Michalska reports. Newslook

Musk said the cuts won’t slow the rate of production, which is happening at Tesla’s assembly plant in California and its battery factory in Nevada. Delays at each operation have prevented the company from rapidly fulfilling paid customer reservations for the Model 3.

“It’s notable that they left the production teams alone because it’s vital that they get the Model 3 production rolling,” Autotrader analyst Michelle Krebs said.

Musk said June 5 that it’s “quite likely” the company will reach its goal of making 5,000 Model 3 cars a week by the end of the month.

Since then, Tesla shares have gained nearly 18%, closing Tuesday at $342.77. The historically volatile stock had been in a slump since late March, when it briefly dipped below $250 as investors grew concerned about Model 3 production delays, Tesla spending and safety investigations.

The automaker has lost more than $1.7 billion over its last four complete quarters, raising the financial stakes for the compact car.

“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 the email. “That is a valid and fair criticism of Tesla’s history to date.”

Tesla’s growth has made the company the pre-eminent maker of electric vehicles. But it has come at a steep cost.

Musk has admitted several mistakes with Tesla, including too much automation on the production line and an “out of control” network of third-party contractors.

“So we’re going to scrub the barnacles on that front. It’s pretty crazy,” Musk said on a conference call in May. “You’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”

Musk has also lashed out against the media in recent weeks, criticizing many reporters as unethical and blasting what he perceives as unfair scrutiny of Tesla’s partially self-driving vehicle technology.

The Home Depot agreement that’s ending involved sales of Tesla solar-energy products at about 800 stores. Tesla employees based at those locations will be removed.

“Our relationship with Tesla will continue through the end of the year, but this change doesn’t affect our plans to continue offering solar options to our customers,” Home Depot spokesman Stephen Holmes said.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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