It's possible this was a strategic move on Musk's part to reaffirm to workers and critics alike that he's still optimistic about the future of the company - an important signal as Tesla works to hit crucial production targets of its next-generation Model 3 electric vehicle. The move will not affect factory workers as Tesla continues to ramp up production of its lower-priced Model 3 compact auto.
As part of this effort, and the need to reduce costs and become profitable, we have made the hard decision to let go of approximately 9 percent of our colleagues across the company.
"I don't think if Tesla becomes profitable in Q3 and Q4, that will be sustainable because of ramping up of the production".
Musk said that the job cuts are part of Tesla's restructuring process.
Free cash flow, a key metric of financial health, widened to negative $1 billion (R13.3bn) in the first quarter from negative $277 million (R3bn) in the fourth quarter, excluding costs of systems for its solar business. He thanked departing employees for their hard work and said Tesla is providing "significant salary and stock vesting" to those being let go, based on their length of service.
Tesla's Autopilot semi-autonomous auto tech has been implicated in numerous crashes lately, and though it's been tough to say where the blame for these incidents lies, Tesla is convinced their software isn't at fault. He said most Tesla employees working at Home Depot will be offered a chance to move to Tesla retail locations.
"The basic problem is that he is making cars at not enough of a gross margin to make money, and that's before the competition rolls out, which is late this year and early next year". As recently as May, Musk spent about $10 million on Tesla shares to counter growing concerns about the company's ability to meet those targets.