Billionaire Elon Musk, the mind behind Tesla-branded tequila and weird media truthiness project Pravda, has been quietly shedding jobs at Tesla despite the company announcing its best quarter ever late last year.
Tesla is also deep in development of its new crossover SUV, the Model Y, which it expects to reach volume production in 2020 according to a letter to shareholders. The Model Y could be the most important launch Tesla has had yet, as the crossover SUV market is a major one in the United States.
However, the new model and profits haven’t expanded Tesla’s workforce. In January, the company slashed nine percent of its jobs, following a similar nine percent reduction last June. Now, Tesla is closing its physical dealerships and moving sales online, meaning thousands more employees will be laid off.
“We will be closing some stores, some reduction in headcount as a result — there’s no question about that. I wish there was some other way,” Musk told CNBC. “Unfortunately, it will entail a reduction in force on the retail side. There’s no way around it.”
As of now, Tesla employs an estimated 40,869 people after closing these stores, a marked decline from 44,223 in January and 48,817 as of the company’s 2018 annual report. That likely isn’t the end of the layoffs, with Tesla warning of more belt-tightening to come.
“In the coming weeks, we will be evaluating all areas of our sales and marketing organization to understand where there are operational efficiencies, and how best to support the transition to online sales, while also continuing to deliver a truly awesome and educational Tesla buying experience,” Musk wrote in an email to Tesla employees.
At the same time, Tesla has struggled to keep up with repairs and returns. According to workers, Tesla also struggles to make 7,000 batteries a week at its Gigafactory — falling short of the 8,000 per-week goal the company has set.
Tesla, like many of Musk’s projects, received significant financial backing by the United States government at its outset. Tesla received around $3.5 billion in government grants and tax credits and an additional half billion dollars in loan guarantees.
Katelyn Kivel is a contributing editor and senior legal reporter for Grit Post in Kalamazoo, Michigan. Follow her on Twitter @KatelynKivel.