Tesla is slashing its workforce by 7% to make a cheaper Model 3

Tesla has announced plans to reduce its full-time workforce by 7% as it works to increase Model 3 production and cut prices. 

CEO Elon Musk told workers about the job cuts Friday in a letter that Tesla posted online. The company will only retain the most critical temps and contractors, Musk said.

Must wrote in the letter that Tesla is "up against massive, entrenched competitors" and must work "much harder than other manufacturers to survive while building affordable, sustainable products."

"To those departing, thank you for everything you have done to advance our mission," he said. "I am deeply grateful for your contributions to Tesla."

Tesla currently has about 45,000 employees, so 3,150 people will be losing their jobs.

The layoffs follow a surprise profit of $312 million for Tesla in the third quarter driven by solid sales of the Model 3. But Musk said Friday that unaudited results indicate Tesla will produce less profit in the fourth quarter.

"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 (TSLA) shares fell as much as 8% in premarket trading. 

 

Source: CNN