Tesla Inc said it would cut thousands of jobs to rein in costs as it ramps up production of its crucial Model 3 sedan, and the electric car maker expects fourth-quarter profit to be lower than the previous quarter, sending its shares down 7%.
The company has long struggled with cash burn and Chief Executive Officer Elon Musk has been under intense pressure to stabilize production of the Model 3, seen critical for easing a cash crunch and achieving long-term profitability.
“I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult,” Musk said in an email to employees that was published on the company’s blog.
“There isn’t any other way,” he said.
Tesla cuts 7% of its workforce to make Model 3 affordable
This is Tesla’s second job cut in seven months and comes just days after it cut US prices for all vehicles and fell short on quarterly deliveries of its mass-market Model 3 sedan.
“This quarter, as with Q3, shipment of higher priced Model 3 variants (this time to Europe and Asia) will hopefully allow us, with great difficulty, effort and some luck, to target a tiny profit,” Musk said.
Tesla reported a profit of $311.5 million, or $1.75 per share, for the third quarter ended Sept. 30.
Musk, who has often set goals and deadlines that Tesla has failed to meet, surprised investors by delivering on his pledge to make the company profitable in the third quarter, for only the third time in its 15-year existence.
Tesla said on Friday it would reduce full-time employee headcount by about 7 % and retain only the most critical temps and contractors.
In June, the company said it was cutting 9 % of its workforce.
As of Dec. 31, 2017, Tesla had 37,543 full-time employees, according to its latest annual filing.