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Tesla to slash seven per cent of workforce as Musk labels the Model 3 "too expensive"

The EV maker will cut be cutting staff as it attempts to increase production levels

Tesla will cut seven per cent of its employees even as it attempts to ramp up Model 3 production, with company boss Elon Musk saying its workforce is more than the brand can support.

It is understood Tesla employs around 45,000 people, meaning 3150 workers US-based are facing the axe.

The decision, reportedly announced in an email to all staff from Musk, blames the need to begin producing the cheaper variants of its popular Model 3 electric vehicle, which will have an immediate impact on the company's bottom line. To date, the brand has focused on only building the more expensive, top-spec models.

But it also creates a unique issue for Tesla, which is currently struggling to hit its own self-imposed production targets - a problem that will likely only get harder with fewer employees.

Musk had said the company would be producing 6000 Model 3 vehicles per week in 2019, but Bloomberg's production tracker currently has Tesla building 4659 cars every seven days.

"We face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels," the letter reads.

"Moreover, we need to continue making progress towards lower priced variants of Model 3. Right now, our most affordable offering is the mid-range Model 3 with premium sound and interior at $44k. The need for a lower priced variants of Model 3 becomes even greater on July 1, when the US tax credit again drops in half, making our car $1,875 more expensive, and again at the end of the year when it goes away entirely.

"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."

Can Tesla hit its production targets with fewer employees? Tell us in the comments below.