>> Tesla will cut thousands of jobs in an effort to reign in costs as it tries to ramp up production of its Model 3. In an email, CEO Elon Musk announced plans Friday to trim Tesla's full-time workforce by 7%. And his message to employees was stark. There isn't any other way, he said.
Reuters' editor Joe White.>> Tesla's workforce cuts really are about cutting the costs of producing the Model 3. The big problem for Tesla which has been on the table and visible to anyone who's been paying attention for a while, is the roll off of the federal tax credit.
Last year everybody who bought one in the United States got a $7,500 tax credit. Now as of January 1 it's $3,750 and it's gonna go down from there to 0 at the end of the year. So what Musk has to do to offset that is to cut the cost of production.
So slashing the work force, it's unpleasant, but that's what you have to do.
Musk said the layoffs were crucial if the company wanted to reach its goal of stabilizing the production of its Model 3 and reducing the electric car's price to $35,000. And the company has been burning through cash in an effort to meet this goal.
This is Tesla's second job cut in seven months and comes just a day after the company ended its customer referral program in an effort to cut costs. Musk also said the electric car maker expects to see its fourth-quarter profits drop from the previous quarter. Tesla shares are down 10% on the news.