202

Tesla to cut 7% of its workforce as it focuses on more affordable vehicles

Sjo/iStock

(NEW YORK) — In an effort to cut costs as it gears up to produce more affordable Model 3 sedans, Tesla announced on Friday it will be cutting approximately 7 percent of its full-time staff.

Tesla CEO Elon Musk explained the decision to employees in an email.

While noting quarterly figures, Musk said the profits made during the last two quarters were mostly due to selling more expensive versions of the Model 3.

“However, 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,” the CEO said. “Moreover, we need to continue making progress towards lower priced variants of Model 3.”

Musk added that the need for more affordable vehicles will increase come 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.”

He apologized for stating “all these numbers” but said he wants to make sure employees “know all the facts and figures and understand that the road ahead is very difficult.”

Along with cutting its full-time staff, Musk said the automaker will only retain the most critical temps and contractors.

“To those departing, thank you for everything you have done to advance our mission. I am deeply grateful for your contributions to Tesla. We would not be where we are today without you,” Musk said in his email.

Tesla shares dropped 7 percent ahead of the opening bell after the announcement was made.

Copyright © 2019, ABC Radio. All rights reserved.