The firm hopes to achieve a Model 3 production rate of 5,000 cars per week by the end of June.
Tesla is cutting nine percent of its workforce in an effort to achieve profitability, CEO Elon Musk announced in a note sent to employees that elaborated on a planned restructuring he publically announced in May.
In an email to workers today, Musk said the cuts amount to about 9 percent of the company's workforce of 40,000. Cuts will not affect factory workers and "production associates" crucial to manufacturing the Model 3 and Tesla's hope of turning an annual profit for the first time in 2018.
Musk goes on to acknowledge that while profitability has never been the electric automaker's strong suit, the company can not go on ignoring the inefficiencies in its workforce if it hopes to achieve its environmental and social goals. Numerous production problems have led to far fewer numbers of auto exiting the factory that intended, and there have been reports of high wastage, adding to costs. The company will also not renew its contract with U.S. hardware chain Home Depot, which now sells the company's solar panels and home energy systems, though "the majority" of Tesla staff now placed in Home Depot stores will move over to Tesla retail positions.
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The company said it ended the quarter with $3.2 billion (£2.3bn) in cash after spending $655.7 million (£483m) in quarterly capital expenses. Tesla has never been profitable in its 15-year existence.
Layoffs reportedly began on Monday and are expected to continue throughout the week. It will instead "focus our efforts on selling solar power in Tesla stores and online", he said.
Tesla announced on Tuesday that it would cut 9pc of jobs across the company.
Hyped by the CEO as his most affordable electric vehicle when production began nearly a year ago, the company has repeatedly missed manufacturing targets, contributing to billions of dollars in ongoing losses and cash burned. The company will seek to re-employ most Tesla employees at Home Depot stores at its own locations. "It is very hard to say goodbye".
To those who are departing, thank you for everything you have done for Tesla and we wish you well in your future opportunities.