While the automaker has struggled with its ramp up, CEO Elon Musk said last week that the company could begin churning out 5,000 vehicles per week by the end of the month, a target it set out to hit by the end of the second quarter.
The terminated jobs will be confined to salaried positions and not include any production workers, meaning the company's Model 3 productions targets will apparently go unaffected.
Tesla will lay off 9 percent of its workforce as it works to reach profitability. Cuts will not affect factory workers and "production associates" crucial to manufacturing the Model 3 and Tesla's hope of turning an annual profit for the first time in 2018.
Tesla told CBC News that it had over 42,000 employees around the world.
Up almost 7% earlier on Tuesday, shares of the company trimmed gains to stand 3.5% higher at $344 by early afternoon. The company is now producing just under 3,000 per week, Bloomberg estimates.
To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company.
Tesla has been burning cash nearly continuously since it was founded 15 years ago.
The company is making the move now so it never has to do it again, he wrote.
The Tesla-branded kiosks were created to educate consumers and ultimately generate sales of its residential rooftop solar panels and Powerwall, a battery it designed for homes that store the energy generated by solar panels. The company will seek to re-employ most Tesla employees at Home Depot stores at its own locations. "It is very hard to say goodbye", the CEO wrote. That makes these layoffs much more significant than the hundreds of workers Tesla fired last fall. In order to minimize the impact, Tesla is providing significant salary and stock vesting (proportionate to length of service) to those we are letting go.
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".