Tesla cuts seven percent of its workforce

The firm is looking to slash costs in order to expand.

Tesla will cut about seven percent of its full-time workforce, according to an email sent to employees by company co-founder and CEO Elon Musk. The news comes shortly after the firm announced the end of its referral program.

"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," Musk explained in the email, which was sent to members of the company's staff and posted on its official blog. He pointed out Tesla's workforce grew by 30 percent in 2018, and that's more than the company can support.

Musk said Tesla needs to cut its workforce because it entered 2019 facing an array of obstacles on its path to make electric cars cost-competitive against gasoline-powered vehicles. The company notably needs to ramp up production of the more affordable Model 3 variants (including the long-promised $35,000 version) before its federal tax incentives expire at the end of 2019, and it needs to cut its operating costs to make the entry-level Model 3 profitable. Currently, the cheapest Model 3 available starts at $44,000, a figure which hardly illustrates the term "mass-market."

"Our products are still too expensive for most people," he admitted. "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."