Tesla to cut workforce by 7 percent

Model 3					Tesla’s Referral Program will officially come to an end on February 1

In a long and apparently very well documented statement sent via email to Tesla employees, Elon Musk advocates the need to lay-off a rather great number of people, around 3,000 of the 45,000 thousand it now employs.

Tesla announced Friday it would be firing seven percent of its workforce, or more than 3,000 employees, with chief executive Elon Musk stressing that the electric auto maker needs to ramp up production of its Model 3 sedan. "There isn't any other way".

According to Musk's tweet posted past year, the firm now employs 45,000 people.

"We face an extremely hard challenge: making our cars, batteries and solar products cost-competitive with fossil fuels", Musk said.

Currently, the only Tesla EVs available in Australia are the Model S and Model X which come with a minimum price tag of $A168,305 for the 100kW dual motor Model S sedan, or $A172,685 for the similarly spec'd Model X SUV. But that was only possible because Tesla continued to focus on more expensive vehicles, including the pricier variants of the Model 3, he says.

In Q3 previous year, we were able to make a 4% profit. The CEO also cited the approaching end of the federal tax credit. With tens of thousands of Americans waiting for the vehicle, Tesla was able to offer the highest-priced versions of the Model 3 first and enjoy a correspondingly fat profit margin.

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He said as a result of the firm's challenges, Tesla had "no choice" but to reduce full-time employee headcount and retain "only the most critical temps and contractors". Shares of Tesla were down just over 9 percent for the day.

Tesla does not announce how many cars it sells in China overall.

Musk said Tesla plans to ramp up production of the Model 3, "as we need to reach more customers who can afford our vehicles".

It is expected that a locally produced Tesla vehicle, with reductions in manufacturing and logistics costs on top of the exempted import tariffs, would cost as little as 300,000 yuan - a price level that could prove attractive to thousands of mainland buyers.

Tesla bulls believe expansion into European markets and the construction of a manufacturing facility in China could shift the company's business into long-term overdrive.

Tesla's job cut news was not unexpected, Jefferies analyst Philippe Houchois said, noting that it was consistent with slower growth rates and also an opportunity to improve productivity. If anything, he says fierce competition will advance his ultimate goal of promoting the widespread use of electric cars.

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