Tesla to layoff 9 percent of workforce

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Electric auto maker Tesla is cutting several thousand jobs across the company as it seeks to reduce costs and become profitable without endangering the critical production ramp-up for its Model 3 sedan.

Musk in the email thanked the employees leaving the company and said the individuals will receive compensation.

"Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us", Musk wrote in the internal memo announcing the job cuts. For almost all of its history, Tesla has put up losses while investing heavily in technology, manufacturing plants and an extensive car-charging network.

Tesla has been under increasing pressure in recent months over its slow rollout of the Model 3 - which is meant to be Tesla's mainstream market offering.

In addition to the restructuring, Tesla won't renew a residential sales agreement with Home Depot Inc. and focus instead on selling solar power in its own stores and online, Musk wrote. The company has yet to make a profit since it was founded by the entrepreneur in 2003, and Musk said following a "comprehensible organizational restructuring". A spokesman said it would reduce overall employment back to around 37,000 - roughly in line with numbers at the end of past year.

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The announcement came in an email Musk sent to employees about a series of layoffs Tesla began this week.

Keybanc Capital Markets analyst Brad Erickson released a note to investors on Monday, saying that he now expected Model 3 deliveries for the second quarter to hit 30,000 vehicles, versus previous estimates of 20,000.

"I don't think if Tesla becomes profitable in Q3 and Q4, that will be sustainable because of ramping up of the production. It is very hard to say goodbye". He added that affected employees will receive "significant salary and stock vesting", proportionate to the time they spent at the company.

To be clear, Tesla will still continue to hire outstanding talent in critical roles as we move forward and there is still a significant need for additional production personnel. We must continue to drive that forward for the good of the world.