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Tesla is reducing its full-employee headcount by 7%, Elon Musk announced in an email sent to employees on Friday. 

The layoffs are necessary if the company plans to keep turning profit as it starts delivering cheaper variants of the Model 3, Musk wrote. The company will also retain only the “most critical” temps and contractors. 

“Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months. Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the standard range (220 mile), standard interior Model 3 at $35k and still be a viable company. There isn’t any other way,” Musk wrote.  Read more…

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