“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” said Musk. “There isn’t any other way.”
Tesla currently employs over 45,000 people, which means the layoffs could affect 3000 workers. It also said it intends to keep only the most critical temps and contractors.
Sales of the Model 3 had helped Tesla to an unexpected profit in Q3, but Musk said that would likely be lower in the fourth quarter. "This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,"
The cheapest version of the most affordable Tesla goes for $44,000, a price Musk wants to reduce to $35,000. “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.”
"Moreover, we need to continue making progress towards lower priced variants of Model 3."
Earlier this week, Tesla said its customer referral program would end on February 1 as it was no longer financially feasible.
In June last year, Tesla cut nine percent of its workforce as it searched for profitability.