Tesla cuts staff by 7% as Musk sees hard times ahead

“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” Musk said.

In an email to employees, Musk said the company faces difficult times in its long-term goal to sell affordable products that function on renewable energy.

“Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.”

The exact number of employees who will be affected is not clear but Tesla had 45,000 persons on its payrolls in October 2018. If still accurate today, that would mean 3,150 layoffs.

Musk said that Tesla faces the challenge of having to make its electric vehicles and solar products a competitive alternative to products that rely on fossil fuels and will have to reduce prices of some of its vehicles to reach that goal.

“Starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles,” Musk said.

“Moreover, we need to continue making progress towards lower priced variants of Model 3,” he added.

The cheapest version of Tesla’s Model 3 costs $44,000 but there could be a new cheaper version costing $35,000.

Tesla stock dropped 9,18% in reaction to the news.