Tesla on Friday announced in a company email that it has cut 7 percent of its full-time workforce.
The move is aimed at getting overheads down so the company can start churning out more affordable Model 3 sedans, namely the promised $35,000 Standard model which will have a 220-mile range.
Tesla currently sells pricier Mid Range and Long Range models with 260 and 310 miles of range, respectively.
In the company email, Tesla CEO Elon Musk pointed out that the 7-percent cut comes after a 30-percent increase in jobs in 2018. Bloomberg reported Friday that Tesla had about 45,000 staff in 2018, so the 7-percent cut could represent as many as 3,150 jobs.
Elon Musk at Tesla Model 3 reveal
Jaguar Land Rover earlier this month said it was cutting 4,500 jobs as it deals with slowing sales, while Ford has also said it will cut thousands of jobs in its European operations. General Motors last November also said it was cutting jobs and ending production of slow-selling sedan models.
For Tesla, the cuts could represent the start of a new focus on profitability at the company, which has become notorious for its high cash burn rate. The automaker posted a GAAP-reported profit of $312 million on record revenues of $6.8 billion in the third quarter of 2018, which Musk described in the email as Tesla's first “meaningful profit” in its 15-year history.
However, he also cautioned that profits for the fourth quarter could be lower, despite deliveries being higher. This is due to the third-quarter profits being boosted by a higher proportion of top-end, fully loaded Model 3 variants. As Tesla starts deliveries of more affordable Model 3 variants, naturally profit will be affected.
Musk reiterated a need to bring more affordable Model 3 variants to market as potential Tesla buyers are set to lose access to federal tax credits for EVs at the end of 2019.
