Tesla to Cut Nearly 3,400 Salaried Staff

Tesla Inc. is cutting its workforce by 9%, or almost 3,400 people—virtually all of them salaried employees.

CEO Elon Musk says no production positions will be affected by the reductions. He also promises “significant” payouts and stock to dismissed employees.

The shrinkage is intended to eliminate redundant jobs and help Tesla turn a full-year profit for the first time since the company was launched nearly 15 years ago.

Musk notes in an email to employees that the company has been driven almost entirely by a desire to accelerate a global shift to sustainable and clean energy. But he concedes the company won’t reach that goal without showing it can become consistently profitable.

Musk says that Tesla’s workforce ballooned to 37,500 people last year, more than 12 times the headcount five years earlier when it was just beginning to ramp up electric-car production. He says the company’s rapid expansion since then has resulted in duplicated functions and jobs that are no longer worthwhile.