Tesla job cuts: Electric car firm to axe thousands of workers worldwide, CEO Elon Musk announces

Elon Musk said job cuts necessary to offset reducing the price of the Model 3 vehicle

Tesla is to cut thousands of jobs across its global workforce, the company announced on Friday.

The electric car manufacturer said it would reduce staff numbers by 7 per cent in order to counteract cutting the price of its Model 3. The company’s chief executive, Elon Musk, recently said headcount had grown to 45,000 worldwide.

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

Earlier this month, Tesla stock dropped after the company cut prices across all models in the US to compensate for a reduction in subsidies for low-emissions vehicles.

On Friday, Mr Musk told staff that 2018 had been “the most challenging in Tesla’s history”.

The company needs to “continue making progress towards lower priced variants of Model 3”. The price of a Model 3 is set to rise again in July when US tax credit will drop again, making the car $1,875 (£1,453) more expensive.

Mr Musk said the group will have to deliver “at least” the mid-range Model 3 in all markets “as we need to reach more customers who can afford our vehicles”.

“This is not new for us – we have always faced significant challenges – but it is the reality we face. There are 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.

“Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity, but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.”

Russ Mould, AJ Bell investment director, said: “There can’t be a person on earth who doesn’t want Elon Musk to succeed in its quest to drive the internal combustion engine out of business (apart from maybe a few oil executives and some hedge fund managers who are short of Tesla stock) but he isn’t helping himself when it comes to persuading investors to keep the faith.

“Today’s profit warning from Tesla comes hot on the heels of a disappointing fourth-quarter sales update at the end of the month and will confirm the suspicions of some that the bumper third-quarter operating profit of $417m was just too good to be true.”

Shares in the group fell more than 9 per cent on Friday.