Tesla to cut 7% jobs to lower its Model 3 costs

Electric carmaker Tesla has said it will cut its workforce after the "most challenging" year in its history.

The company said it would reduce staff numbers by 7 percent 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.

In an email to employees, shared on the firm's website, founder Elon Musk said that growth at the firm had been strong.

But he added the firm's cars were still "too expensive for most people" and the road ahead was "very difficult".

The firm employs more than 45,000 people currently meaning it will lay off over 3,000.

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.

Musk said 2018 was Tesla's "most successful" yet, in which it delivered almost as many cars as it had in all the previous years of its existence combined.

"This quarter will hopefully allow us, with great difficulty, effort, and

some luck, to target a tiny profit," he wrote.

"However, starting around May, we will need to deliver at least the mid-range Model 3 variant in all markets, as we need to reach more customers who can afford our vehicles.

"Moreover, we need to continue making progress towards lower-priced variants of Model 3."

He said as a result of the firm's challenges, Tesla had "no choice" but to reduce full-time employee headcount and retain "only the most critical temps and contractors".

He added the firm would need to make these cuts while "increasing the Model 3 production rate" and making many "manufacturing engineering improvements in the coming months".

Shares in the group fell almost 4 percent in pre-market trading on Friday.