Tesla is set to cut 7% of its workers while aiming to produce cheaper EVs, batteries and solar products.
Its chief executive Elon Musk is keen to make EVs for the masses and says the company needs to expand its customer base to survive.
Share prices fell by 11% after the job cuts were announced – the second round of job cuts in a year (9% in June).
“We face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels,” he says in a memo to staff, The Wall Street Journal reports.
“While we have made great progress, our products are still too expensive for most people.”
Musk says 2018 was Tesla’s most challenging year yet.
Although it delivered more than 245,000 EVs last year, the company fell short of its goal of making 500,000 EVs in the year.
Musk says he wants to ensure staff know the situation and that the road ahead is very difficult, despite the company posting about a US$300 million quarterly profit in October last year, driven through higher priced North American EV sales.
Based in Palo Alto, California, Tesla has about 45,000 employees, meaning up to 3150 could lose their jobs.
Tesla’s aim includes getting a cheaper mid-range Model 3 out.
“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,” Musk says in the staff memo.
US president Donald Trump and others want to remove a tax incentive encouraging people to buy EVs. The US automotive industry is reportedly concerned about some tariffs introduced and proposed, despite improvement in the US economy.
Musk’s rocket company SpaceX has also had job cuts, expected to reach about 10% of its workforce.
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