Less than a year after Elon Musk said he would never again lay off Tesla employees, the company is cutting 7 percent of its workforce.

The cuts were announced in an email Musk sent to employees at 1:20 a.m. Friday, in which the Tesla founder cautioned that the "road ahead is very difficult," The Wall Street Journal reports. The exact number of job cuts is unclear, but the carmaker employed about 49,000 people at the end of last year. The Palo Alto, California-based company is working to reduce costs while increasing production rates for its Model 3 vehicle. The change would allow Tesla to finally deliver on its promise to offer its electric car for $35,000 and "still be a viable company," Musk said. Currently, the most affordable version of Tesla's Model 3 sedan starts at around $44,000.

"Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity," Musk wrote. "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."

Last summer, Tesla also cut more than 4,000 jobs, or about 9 percent of its workforce at the time. The company reported a record profit of $311.5 million for the third quarter of 2018, but in his note to employees Friday, Musk cautioned that preliminary, unaudited results suggest lower gains for Q4. "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 wrote.

Tesla went through what Musk characterized as "delivery logistics hell" in 2018, as employees struggled to get vehicles to customers on time. In October, Musk tweaked Tesla's referral program to incentivize sales by offering six months of free supercharging, but the founder tweeted this week that the program would end on February 1 because it was "adding too much cost to the cars." 

Published on: Jan 18, 2019