Tesla Chief Executive Elon Musk told employees Tuesday that the company would lay off 9 percent of its workforce.
The move to cut thousands of workers is a way to slice costs and seek sustainable profitability, Musk argued. Shares of Tesla rose 3.2 percent amid the news to close at $342.77.
“We made these decisions by evaluating the criticality of each position, whether certain jobs could be done more efficiently and productively, and by assessing the specific skills and abilities of each individual in the company,” Musk wrote in an email sent to all Tesla employees.
Based off company filings, around 3,300 people would likely be laid off.
Investors have been pressuring the company to speed up production of its Model 3 electric luxury sedan. Musk noted that the employment cuts will not impact this push to manufacture more Model 3 cars.
Earlier in June, Tesla said at a shareholders meeting that Model 3 production had reached 3,500 cars per week. The company wants to increase production to 6,000 per week by the end of June in order to break even on each car produced. Part of this ramp-up included hiring new employees.
Musk said the drive toward profitability, and, therefore, the job cuts, was an unfortunate byproduct of the structures that govern Tesla.
“Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us,” Musk continued. “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. That is a valid unfair criticism of Tesla’s history to date.”
In total, Tesla employs about 37,000 people, the company estimates.