Tesla cuts over costly cars

Tesla is cutting thousands of jobs after boss elon Musk admitted its cars were still too expensive.

The electric car maker, whose vehicles start at £34,000, said it needed to lower the price of its flagship Model 3 and could no longer afford a 30pc increase to the size of workforce last year.

and in another blow, its shares crashed 9pc when Us markets opened after Musk said it was on course to make a ‘tiny profit’.

Tesla embarked on the hiring spree while it was desperately trying to ramp up production of the sedan, its first vehicle aimed at the mass market.

But in an email to employees, Musk said the firm had ‘ no choice’ but to lay off 7pc of its full-time workforce, around 3,000 people. It employs 45,000.

The 47-year-old said: ‘While we have made great progress, our products are still too expensive for most people.

‘Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale. The road ahead is very difficult. This is not new for us – we have always faced significant challenges – but it is the reality we face.’

When launching the Model 3, Musk originally said it would start from £27,000 but so far it has had to focus on shipping more expensive variants to stave off losses. In the Us, he said reductions to tax credits this year would also make the vehicles more expensive unless the company made more savings.