Tesla Job Cuts: How Many Employees Will Be Let Go?

Tesla (TSLA) has announced that it will be cutting 7 percent of its full-time workforce in an effort to become more competitive with its Model 3. The cuts come as CEO Elon Musk said focus must be on delivering “at least the mid-range Model 3 variant in all markets.”

In an email to employees, Musk laid out the plans for the company going forward as well as how only the “only the most critical temps and contractors” will be retained. In a tweet from October 2018, Musk revealed that the company had 45,000 employees, which suggests that over 3,000 will be cut.

Musk warned employees of the volatility of the company saying, “many companies that can offer a better work-life balance, because they are larger and more mature or in industries that are not so voraciously competitive.”

“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months,” he added.

“Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile) standard interior Model 3 at $35k and still be a viable company. There isn’t any other way.”

In the email to employees, Musk reported that 2018 was the most successful year to date for Tesla. The company revealed a 4 percent earnings increase, which Musk attributed to the Model 3. He said it was the best-selling premium U.S. vehicle of the year.

“As we all experienced first-hand, last year was the most challenging in Tesla’s history. However, thanks to your efforts, 2018 was also the most successful year in Tesla’s history: we delivered almost as many cars as we did in all of 2017 in the last quarter alone and nearly as many cars last year as we did in all the prior years of Tesla’s existence combined!” Musk said.

“Model 3 also became the best-selling premium vehicle of 2018 in the US. This is truly remarkable and something that few thought possible just a short time ago.”

The job cuts are just one of a number of reductions that the company has made as of recently. Earlier this week, Tesla announced that it would be eliminating its buyer referral program because it proved to be too costly.

Share of Tesla were down 12.47 percent as of 2:13 p.m. EST on Friday.