NEW YORK, Jan. 18 (Xinhua) -- Shares of Tesla continued to lose further on the over-seven-percent tumble shortly after the opening bell, as CEO Elon Musk announced to cut staff by seven percent and indicated declining earnings for the fourth quarter of 2018 earlier on Friday, in a bid to lower costs for its Model 3 sedan.

Tesla will reduce its full-time employee headcount by approximately seven percent and retain only the most critical temps and contractors, Musk said in a company update statement.

"Tesla will need to make these cuts while increasing the Model 3 production rate and making many manufacturing engineering improvements in the coming months," he noted.

The California-based auto maker is facing "an extremely difficult challenge" to make its cars, batteries and solar products cost-competitive with fossil fuels. "While we have made great progress, our products are still too expensive for most people," Musk said.

The electric vehicle maker also expected to lower its fourth-quarter profit from the previous quarter's 311.5 million U.S. dollars, part of which came from the preferential sales of higher priced Model 3 variants in North America.

To make the profitable Model 3 reach more not-that-rich customers, Tesla has made constant efforts to slash costs. The company plans to deliver at least the mid-range Model 3 variant in all markets around the world starting around May.

Another obstacle for Tesla's product price cut is the shrinking U.S. tax credit, for which domestic buyers can apply to reduce their spending.

The 7,500-U.S.-dollar tax credit for Tesla's all electric vehicles has started to diminish since Dec. 31, 2018. It will fall in half on July 1 and go away entirely at the end of the year, as a result of which Tesla's cars will become more expensive.

To further rein in expenses, Musk announced on Thursday that its customer referral program will end on Feb. 1. The program allows its customers to refer friends to buy Model S, Model X, Model 3 and solar panels and give the latter six months of free supercharging.

Friday's staff layoff move came following Tesla's nine-percent workforce slash last June. Later in October last year, Musk said the Tesla team had 45,000 people.

"The road ahead is very difficult," Musk said in the statement. "For those remaining, although there are many challenges ahead, I believe we have the most exciting product roadmap of any consumer product company in the world."