Tesla Inc announced on Friday that it will need to cut 7 percent of its workforce in order to increase production of lower priced versions of Model 3 Sedan

Tesla’s cheapest model is the $44,000 Model 3 Sedan than needs to break out of the niche-car market and broaden its customer base so that more people can afford it.

Tesla already cut its staff by 9 percent in June, leaving the company with a team of 45,000 people. But is now still struggling to achieve long-term profitability and is seeing lower profits than anticipated. The 7 percent cut would mean that about 3,150 people will lose their jobs.

Tesla CEO Elon Musk said on Friday in a letter to his employees that the company will reduce full-time employee headcount by about 7 percent and only retain the most critical temps and contractors:

“Looking ahead at our mission of accelerating the advent of sustainable transport and energy, which is important for all life on Earth, we face an extremely difficult challenge: making our cars, batteries and solar products cost-competitive with fossil fuels. While we have made great progress, our products are still too expensive for most people.”

He also said that Tesla needs to deliver at least the mid-range Model 3 version in all markets starting around May, since it needs to reach more customers who can afford the cars:

“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, Tesla broke ground earlier this month with starting the built of a factory in Shanghai, its first outside the United States. The company plans to begin production of the Model 3 there and a planned crossover by the year’s end.

Source: Associated Press: apnews.com