"Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions", Tesla CEO Elon Musk wrote in an email to employees on Tuesday.
Tesla said it plans to cut 9% of its workforce as part of a restructuring meant to reduce costs and boost profitability.
The company did not say how much money the cuts would save.
On Tuesday, Musk tweeted that the company will cut 9 percent of its workforce as part of the restructuring and to "become profitable".
The move - the biggest widespread layoff in Tesla's 15-year history - will nearly entirely involve salaried employees and comes as the carmaker races to hit production targets for its critical Model 3 sedan. Employees told the paper that they received "little or no warnings" before the firings, which reportedly targeted 400 to 700 employees, leading to "lowered morale through many departments".
Up almost 7% earlier on Tuesday, shares of the company trimmed gains to stand 3.5% higher at $344 by early afternoon.More news: Cops: Tennessee Grandma Put Kids in Kennels in Trunk
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It was not immediately clear if any of the layoffs would affect Tesla's solar panel factory in Buffalo, where the company has been partnering with Panasonic.
Musk said the company was notifying affected employees this week.
According to Musk, "Tesla has grown and evolved rapidly over the past several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are hard to justify today". "That is a valid and fair criticism of Tesla's history to date".
"I don't think if Tesla becomes profitable in Q3 and Q4, that will be sustainable because of ramping up of the production".
Together, the Buffalo plant has more than 500 workers, Tesla has said. His company began to roll out Tesla-branded selling spaces at 800 Home Depot locations earlier this year, building on a previous relationship the retailer had with SolarCity Corp., which Tesla acquired in 2016.
"We are a small company in one of the toughest and most competitive industries on Earth", Musk wrote.