Tesla to slash tenth of workforce as Elon Musk says ‘profit is obviously not what motivates us’

Investors have expressed concerns about how fast the electric car company is going through cash

Tesla Model 3s and X's are shown charging in an underground parking lot next to a Tesla store in San Diego, California

(Reuters)

Tesla plans to slash its workforce by nearly one-tenth as the electric car manufacturer faces rising pressure to achieve profitability.

CEO Elon Musk wrote in an internal email that the 9 per cent staff reduction was in part a matter of cutting redundant roles. But he also acknowledged cash-flow issues that have raised eyebrows on Wall Street.

“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”, Mr Musk wrote. “What drives us is our mission to accelerate the world transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable”.

Investors have raised questions about Tesla’s high rate of cash burn and its ability to hit production targets as it seeks to roll out its mass-market Model 3. Mr Musk shocked observers earlier this year when he rebuffed investors’ “boring, bonehead questions” during an earnings call.

Mr Musk said that the layoffs would not affect the company’s Model 3 plan because production associates would be unaffected.

In addition to the amplifying questions from investors, the company has faced mounting scrutiny around the safety of its vehicles and workplace.

Multiple Tesla crashes in recent months, including that of a vehicle whose autopilot system was engaged ahead of a fatal accident in California, have led to unwanted headlines for the company.

So, too, did a report by investigative news outlet Reveal finding that Tesla as under-reporting injuries at its Fremont, California plant.

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Mr Musk has lashed out at those reports, saying the media focuses on Tesla crashes while ignoring more-frequent crashes of conventional vehicles and rejecting the Reveal story as inaccurate.

The company has also come under the microscope of labour regulators. Representatives of Tesla and an autoworkers union clashed during a National Labour Relations board hearing this week that turned on allegations of Tesla officials seeking to suppress union activity. Tesla denies those allegations.