Elon Musk announces Tesla will cut around 3,000 jobs

Grimes & Banks

While the automaker did not state the actual number of jobs being cut, analysts estimated a figure of 3,150 based on the 45,000 total number of employees that Tesla CEO Elon Musk said the company employed.

After Elon Musk published a memo on Friday announcing plans to cut 7% of Tesla's workforce, one analyst said the electric auto maker is at an inflection point.

A copy of his email published on the company's website on Friday said Tesla increased its staff by 30 percent a year ago, but it could not support that size of staff as "the road ahead is very difficult". Musk pointed out, though, that the third quarter's profit was partly the result of a strong push to sell higher-priced variants of the vehicle - the Long Range Model 3 AWD and the Model 3 Performance - to customers in North America.

The news was revealed in a blog on Tesla's site written by Musk himself while China's top regulator revealed the firm would be recalling over 14,000 Model S in the country.

Tesla faces significant headwinds in making the Model 3 a true mass-market vehicle.

Last week, SpaceX, which is also headed by Elon Musk, had announced plans to layoff 10 per cent of its more than 6,000 employees. Starting first with the possible negative path, Ives said that he anticipates "pressure" on Tesla demand in 2019 as the company works to increase production on its budget-friendly Model 3.

Musk said that the cuts are necessary to help Tesla cope with what Musk described as an "extremely hard challenge: making our cars, batteries and solar products cost-competitive with fossil fuels".

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Tesla's layoffs mark the second shedding of workers in a matter of months.

Currently, the most affordable Model 3 you can buy costs $44,000-significantly above the target price of $35,000 Musk announced in 2016. As a result, Musk said, profits in Q4 were smaller than in Q3. On Friday, Teslay announced it would lay off 7 percent of its workforce, cutting some 3,000 jobs.

Tesla, essentially, finds itself in something of a tough place at the moment, as it needs to cut costs while at the same time ramping up production.

Tesla is still aiming to offer a $35,000 version of the Model 3 with a range of 220 miles.

I want to make sure that you know all the facts and figures and understand that the road ahead is very hard.

The Model 3 is leading attempts by Tesla to make electric cars affordable to the average consumer.

"While we have made great progress, our products are still too expensive for most people", he said.

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