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Tesla stock tanks as company slashes workforce by 7 percent

Reuters logo Reuters 1/18/2019 Shubham Kalia

Tesla said Friday it is cutting several thousands of jobs, as the electric car maker looks to trim costs and be consistently profitable while it ramps up the production of its crucial Model 3 sedan.

The company's stock tumbled by nearly 13 percent to close at $302.26.

"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," Chief Executive Officer Elon Musk said in an email to employees that was published on the company's blog.

"There isn't any other way," he said.

Related video: Tesla job cuts should have been anticipated, says analyst (provided by CNBC)

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The company said it would reduce full-time employee headcount by about 7 percent and retain only the most critical temps and contractors.

Earlier this month, Tesla cut U.S. prices for all its vehicles to offset lower green tax credits, and fell short on quarterly deliveries of its mass-market Model 3 sedan.

Musk said the company is on target to report a GAAP profit in its fourth quarter, but less than the previous three-month period.

"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.

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