Tesla sinks after Elon Musk announces layoffs amid Model 3 production ramp
- Tesla CEO Elon Musk sent a letter to employees Friday morning informing them the company was cutting 7% of its workforce.
- Musk said the layoffs were coming as the company begins production of its $35,000 Model 3.
- Tesla shares fell 6.55% following the announcement.
- Watch Tesla trade live.
Tesla slid 6.55% Friday morning after CEO Elon Musk sent a letter to employees saying the electric-car maker was laying off workers. The selling had Tesla shares trading near $322 apiece — the middle of their range over the past year.
"We unfortunately have no choice but to reduce full-time employee headcount by approximately 7% (we grew by 30% last year, which is more than we can support) and retain only the most critical temps and contractors," Musk said.
RELATED: Check out the best places to work in 2019, according to Glassdoor:
"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."
It has been a roller-coaster ride for Tesla shareholders. The stock topped out above $387 on August 7, the day Musk said he had "funding secured" to take Tesla private at $420 a share. Musk didn't have funding secured, and he later settled with the Securities and Exchange Commission, which had accused him of misleading the public. As part of the settlement, he agreed to step down as chairman for at least three years and pay a fine of $20 million.
Tesla's stock tumbled to $250 in the wake of the "funding secured" saga but was able to hold key support in the area. It then managed to climb back above $350 after the company crushed third-quarter expectations and named Robyn Denholm, the CFO at Australian telecom Telstra, as its new board chair.
The electric-car maker is expected to earn an adjusted $2.20 a share on revenue of $7.07 billion, according to the Bloomberg consensus, when it reports fourth-quarter results on February 6.
Tesla shares were up 4.35% this year through Thursday.
More from Business Insider:
Share your opinion — become a BI Insider!
12 signs your boss is impressed with you, even if it doesn't seem like it
Michael Cohen implicates Trump, confirms report he paid firm to rig online polls in Trump's favor and create @WomenForCohen Twitter account