Tesla culls workforce to slash price of cars

Tesla has announced it plans to cut more than 3000 jobs from its workforce after what's been described by its founder, Elon Musk, as the "most challenging" year in its history.

In a leaked email to Tesla employees, Musk explained how the car-maker was struggling to develop its pure-electric cars as cheaply as a conventional car - and that resulted in a vehicle "too expensive for most people".

To help lower overheads and reduce the cost of its new core car, the Model 3, Tesla says 7 per cent of its 45,000 workers must go.

Despite complaining that his cars were too pricey for average drivers, Musk claimed that 2018 had been Tesla's most successful year yet, delivering in one year as many cars as it had in all the previous years of existence.

Earlier this month Tesla cut prices of its cars in the US to offset the introduction of lower green tax credits.

The car-maker also fell short on its quarterly deliveries of the Model 3.

The next round of price cuts expected for Tesla models, at least for its home market, is scheduled for July when the US federal tax credits drops by half adding $1875 ($A2600) to the list price of every Model 3, Model S and Model X.

Prices of Teslas, again, will rise on December 31 when the green tax credits are ditched altogether.

With the arrival of pure-electric competitors from the likes of Jaguar, Audi and Mercedes-Benz, plus a whole raft of other battery-powered vehicles from Chinese start-ups, Tesla's pure-electric car monopoly is seemingly nearing the end. Industry analysts suggest price cuts will be necessary for Teslas to remain competitive; not just in the US, but globally.

In the email to employees, Musk revealed increasing the Model 3 production rate and making "many manufacturing engineering improvements in the coming months" would help boost profit and allow the car-maker to lower prices.

Tesla will finally begin selling lower spec versions of the Model 3, with the mid-range trim set to arrive in "all markets" from May 2019.

Despite describing 2018 as the "most challenging" year in Tesla's history, Musk announced on Friday the company is still on target to make a "tiny profit" from the fourth and final quarter for 2018, but it will be less than the previous three months.

Tesla's latest announcement follows the dismissal of 9 per cent of its workforce back in June. On that occasion, the car-maker reportedly miscalculated how quickly it could ramp up Model 3 production.

Shortly after the mass redundancies, the car-maker was forced to re-hire many of the sacked employees after expanding its production facility to include a tent to help solve its "production hell" assembly process.

Originally, when it was introduced, the Model 3 was heralded as the "affordable" pure-electric car but Musk's dream has yet to be realised as minuscule profit margins have forced Tesla to focus on the most expensive versions to break even.