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."
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