► 9% of workforce
► Stocks rise after the news
► Model 3 production not directly affected
Yesterday, Elon Musk revealed Tesla is to cut 9% of its workforce,in a move that’ll see thousands of people lose their jobs. It’s largest effort yet by Tesla to become more profitable, and after the news, the company’s stock rose by 3.2% to a three-month high of $US342.77.
However, the cuts come from the management side of the business – not the production side – so this shouldn’t affect the production of the Model 3, or other imminent new models directly.
What’s happened?
After an internal email leaked online, Musk took to Twitter to clarify the changes. In a tweet, the Tesla CEO described the changes as a ‘comprehensive organizational restructuring’ in order to ‘reduces costs and become profitable.’
Tesla hasn’t made a profit in 15 years of existence, but this new attempt to ‘flatten’ the management structure could bring it into the black.
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Musk also says that Tesla is providing significant salary and stock vesting to those who are let go.
What about the Model 3?
Tesla’s decision to almost decimate its workforce shouldn’t have a major impact on the Model 3, because it’s more about streamlining the management side of things. In this new phase of the company, production must be the main focus.
After all, Tesla’s stock actually rose a total of 3.2% after the announcement, signalling investors support of the restructuring. While the reduction of any workforce is never a totally positive thing, it’s the correct step for Tesla right now.
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