Tesla undecimates its workforce but Elon insists everything's absolutely fine

Tesla Model 3- front action

Tesla Inc (TSLA.O) is cutting several thousand jobs across the company as it seeks to reduce costs and become sustainably profitable without endangering the critical ramp up of production of its Model 3 sedan.

Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart.

"Given that Tesla has never made an annual profit in the nearly 15 years since we have existed, profit is obviously not what motivates us", he wrote in an email to employees and posted on Twitter.

Musk said the company was notifying affected employees this week. That is a valid and fair criticism of Tesla's history to date. The company let go of 400 to 700 workers last fall after completing annual performance reviews, and it laid off a small number of workers back in 2008.

"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 can eventually demonstrate that we can be sustainably profitable".

The company is making the move now so it never has to do it again, he wrote. But Musk has promised an acceleration of Model 3 manufacturing, which will allow the company to bring in a lot more revenue.

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It is worth noting that the email also comes following several weeks of press reports outlining the auto company's troubles and predicting exactly what has happened - the need to cut costs while keeping production moving as fast as possible.

Musk also said that Tesla had decided not to renew a residential sales agreement with Home Depot (HD.N), and would focus instead on selling its solar products through its own stores and website.

Tesla's workforce has grown at an incredible pace since the acquisition of SolarCity, which pushed Tesla's total headcount to over 30,000 employees.

He wrote that reaching Musk's Model 3 production goal of 5,000 vehicles per week by the end of June is still the primary driver of profitability.

The Model 3 starts at $35,000, but lower-priced configurations are not available yet.

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