Notebookcheck

Tesla cuts 9% of staff in an effort to bandage its cash hemorrhage

Tesla is flushing cash down the drain, and its workers are paying the price. (Image: self)
Tesla is flushing cash down the drain, and its workers are paying the price. (Image: self)
In a memo to his car manufacturing company, Elon Musk said that Tesla would be laying off 9% of its workforce, which equates to about 3,000 jobs. This is the latest move by the electric car manufacturer to stem its outward cash flow, which has only grown since the delivery of its first vehicle six years ago.

Working For Notebookcheck

Are you a techie who knows how to write? Then join our Team!

Currently wanted: 
News Editor - Details here

Tesla may be in trouble. After multiple delays of its Model 3 and a heavily stunted production run, many critics have called Tesla’s cash flow into question. Claims of the company’s imminent demise have been thrown around for years now, but these accusations may not be far from the truth. In a memo to his company, CEO Elon Musk stated that the company would be restructuring itself. As a result, 9% of Tesla’s employees have been terminated.

In the memo, Musk points out that the cuts will be made from salaried positions and should adversely affect production of the Model 3, which has already hit multiple roadblocks. While an exact number wasn’t given, current estimates peg the job cuts at a little more than 3,000. These layoffs add to the hundreds made back in October.

Musk also announced that Tesla would be cutting ties with Home Depot, which currently sells Tesla’s solar products. Tesla-branded home solar products will now be sold only at Tesla retail locations and online.

The reason cited for the layoffs is Tesla's growing expenses. As Musk points out in his memo, Tesla has never made an annual profit in its 15 years of life. That bears repeating: Tesla has never made a profit. Regardless of profit, Tesla’s cash flow has been negative for all but 4 quarters over the past 8 years. While this is par for the course for startups like Tesla, the company’s expenditures have been astounding in recent years, routinely topping USD $1 billion annually.

At this point, a reorganization may be nothing more than a stopgap. They’re certainly not making any money by continually missing deadlines and hitting low production numbers. What Tesla needs is a deliverable product, made en masse. If this round of layoffs has anything to show, it’s that you can’t float a company on a promise.

Source(s)

Read all 5 comments / answer
static version load dynamic
Loading Comments
Comment on this article
Please share our article, every link counts!
> Notebook / Laptop Reviews and News > News > News Archive > Newsarchive 2018 06 > Tesla cuts 9% of staff in an effort to bandage its cash hemorrhage
Sam Medley, 2018-06-13 (Update: 2018-06-13)
Sam Medley
Sam Medley - Review Editor - @samuel_medley
I've been a "tech-head" my entire life. After graduating college with a degree in Mathematics, I worked in finance and banking a few years before taking a job as a Systems Analyst for my local school district. I started working with Notebookcheck in October of 2016 and have enjoyed writing news articles and notebook reviews. My areas of interest include the business side of technology, retro gaming, Linux, and innovative gadgets. When I'm not hunched over an electronic device or writing code for a new database, I'm either outside with my family, playing a decade-old video game, or sitting behind a drum set.