Tesla lays off thousands of workers in corporate restructuring

A Tesla car

Tesla is slashing thousands of jobs, its chief executive Elon Musk announced Tuesday, as the electronic vehicle company attempts to hit production targets and reach profitability.

Elon Musk, Tesla's chairman, said on Twitter that the job cuts were "difficult, but necessary".

"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", Musk wrote. Year-to-date, Tesla's headcount is up roughly 15%.

The move coincided with a significant jump in Tesla's stock price following a report from Keybanc Capital Markets that it increased its second-quarter production outlook for the Model 3 by 50 percent.

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.

Musk goes on to acknowledge that while profitability has never been the electric automaker's strong suit, the company can not go on ignoring the inefficiencies in its workforce if it hopes to achieve its environmental and social goals.

Following the news, Tesla stock climbed more than 6%.

Tesla's announcement comes a month after Musk announced a restructuring of Tesla's organizational chart. Company insiders told Fortune that it has hired thousands of employees in the past six months.

"I don't think if Tesla becomes profitable in Q3 and Q4, that will be sustainable because of ramping up of the production". Most employees assigned to Home Depot positions will have the option to move to Tesla's retail stores, says Musk.

In October, Tesla fired "hundreds of workers" following annual performance reviews.

"We are making this hard decision now so that we never have to do this again", he said.

Noting that a "difficult job" remains ahead, Musk added: "We are a small company in one of the toughest and most competitive industries on Earth, where just staying alive, let alone growing, is a form of victory". We must continue to drive that forward for the good of the world.

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