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.
Tesla fast-tracks China program with plans to start delivery in March
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.