Some serious cost cutting appears to be underway at Tesla. Days after the company’s CEO Elon Musk confirmed that the customer referral program was ending, he announced that the company is firing 7 percent of its entire workforce. Musk announced in a company-wide email that seven percent of Tesla’s full-time employee headcount is being reduced.
A lot of people who work at the company are going to get affected by this move. The company hires around 45,000 people so a trimming of this size and magnitude is going to leave around 3,000 employees looking for a new job.
“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” he added.
Musk also said that going forward, Tesla is only going to retain the “most critical temps and contractors.” This is yet another indication that the company is seriously tightening its belt in the pursuit of those elusive profits.
It’s evident that these are changes which need to be made if Tesla wants sustainable profitability. It did make a small profit in the final two quarters of last year but investors are still hoping to see if they can be transformed into long-term profits.