Elon Musk announces Tesla will cut around 3,000 jobs

Model 3					Tesla’s Referral Program will officially come to an end on February 1

The rationale behind the 7% job cuts was extensively explained by Elon Musk in an email to Tesla employees, which was shared on the company's blog.

Because Tesla needs to sell more and at the same time cheaper cars, so that all mankind could benefit from the "advent of sustainable transport and energy, which is important for all life on Earth", Musk says.

"While we have made great progress, our products are still too expensive for most people,"Musk said".

Within Tesla's own ecosystem, Tesla has been struggling from both production and delivery issues, which Musk admitted in a tweet past year, saying the company had gone from "production hell to delivery logistics hell". The good news is that the company is making a major push to produce a cheaper Model 3 - though Musk says that the Model 3 was the best-selling premium vehicle in the USA previous year, its starting price of $44,000 is "still too expensive for most people". As Tesla starts deliveries of more affordable Model 3 variants, naturally profit will be affected. In fact, he says that Tesla's 2018 growth was "more than we can support;" the company grew by 30% in the past year.

The company must now make rapid gains in its manufacturing processes as it increases the production rate of the Model 3, Musk said.

Mr Musk was also caught up in several scandals, including being sued by the US Securities and Exchange Commission after tweeting that he planned to take Tesla private.

Tesla shares dipped dramatically on Friday, down 13 percent to $302. In June, Tesla dismissed 9 percent of its workforce, after misjudging how quickly it could ramp up mass-manufacture of the Model 3 - only to go on an aggressive hiring spree shortly after.

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Next month, it plans to begin selling the Model 3 in Europe to make up for an expected sales drop in the U.S.

Mr Musk said in October that Tesla had 45,000 employees.

"Tesla has only been producing cars for about a decade and we're up against massive, entrenched competitors", Musk wrote. In the fourth quarter, Tesla built about 4,700 Model 3s per week-and that's of course including a new line assembled a year ago in a tent in the factory parking lot.

And while preliminary numbers indicate another profitable quarter ahead, Musk said it appears to be a smaller.

Asked if there would be another referral program in the offing, Musk replied, "No, the whole referral incentive system will end", citing the main reason as added costs, in particular the Model 3.

Currently, the most affordable Tesla offering is the mid-range 264-mile Model 3 with premium sound and interior at $44,000.

"As we all experienced first-hand, past year was the most challenging in Tesla's history".

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