Tesla Inc. (TSLA) saw its shares plunge over 7.9% in premarket hours on Friday after the company announced that it was going to lay off 7% of its workforce in an effort to cut costs. In an email to employees, CEO Elon Musk said the company is attempting to make the Model 3 sedan more affordable for its customers.
Tesla has more than 45,000 employees so the 7% reduction would affect over 3,000 employees. This is the company’s second workforce reduction in a couple of months. Last June, Tesla reduced its workforce by 9% in order to reduce expenses.
Musk said that apart from the cost reductions, Tesla has to increase its Model 3 production rate and improve engineering in order to be able to sell the Model 3 at an affordable price and to sustain itself as a company.
Musk indicated that Tesla will continue its profitable streak in the fourth quarter as well after the third quarter but hinted that the fourth-quarter profits would be slightly lower than the third quarter.
The cheapest version of the Model 3 is priced at $44,000 and Tesla has not yet been able to offer the sedan at the intended price of $35,000. The company is looking to make the Model 3 more affordable as soon as it can before the US federal tax credit on electric vehicles ends this year.
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