Unique: Elon Musk plans to chop 10% of jobs at Tesla

  • Tesla employed around 100,000 people at the end of 2021
  • Musk warned employees Tuesday to return to the office or leave
  • US leaders are increasingly somber about the economy

SAN FRANCISCO, June 3 (Reuters) – Tesla (TSLA.O) CEO Elon Musk has a “super bad feeling” about the economy and needs to cut about 10% of jobs at the electric carmaker, he said in an E -Mail to executives seen by Reuters.

The message sent on Thursday, titled “Pausing all hiring worldwide,” came two days after the billionaire told employees to return or leave the workplace, and adds to a growing chorus of warnings from business leaders about the risks of a recession on.

Nearly 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, the annual SEC filing showed.

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The company could not immediately be reached for comment.

Tesla shares fell nearly 3% in U.S. premarket trading on Friday and the Frankfurt-listed stock fell 3.6%, according to the Reuters report. US Nasdaq futures turned negative, trading 0.6% lower.

Musk has warned of the risks of a recession in recent weeks, but his email ordering a hiring freeze and downsizing was the most direct and high-profile message of its kind from an automaker boss.

So far, demand for Tesla cars and other electric vehicles (EVs) has remained strong, and many traditional indicators of a downturn — including rising dealer inventories and stimulus in the United States — have failed to materialize.

But Tesla has struggled to restart production at its Shanghai plant after COVID-19 lockdowns led to costly outages.

“Musk’s bad feeling is shared by many people,” said Carsten Brzeski, global head of macroeconomic research at Dutch bank ING. “But we are not talking about a global recession. We expect the global economy to slow down towards the end of the year. The US will cool while China and Europe will not recover.”

Musk’s bleak outlook echoes recent comments from executives including Jamie Dimon, CEO of JPMorgan Chase & Co, and John Waldron, President of Goldman Sachs.

A “hurricane is right out there on the road that’s coming our way,” Dimon said this week. Continue reading

Inflation in the United States is hovering at a 40-year high and has pushed up the cost of living for Americans, while the Federal Reserve faces a difficult task of restraining demand enough to contain inflation without triggering a recession cause.

Musk, according to Forbes the richest man in the world, did not elaborate on the reasons for his “super bad feeling” about the economic outlook in the short email obtained by Reuters.

It was also not immediately clear what impact Musk’s view would have on his $44 billion bid for Twitter (TWTR.N).

Several analysts recently lowered price targets for Tesla and are forecasting a loss of production at its Shanghai plant, a hub that supplies electric vehicles to China and for export.

China accounted for just over a third of Tesla’s global deliveries in 2021, according to the company and sales data published there. On Thursday, Daiwa Capital Markets estimated that Tesla has about 32,000 orders awaiting delivery in China, compared to 600,000 vehicles for BYD (002594.SZ), its larger EV rival in that market.

Wedbush Securities analyst Daniel Ives said in a tweet that it appears Musk and Tesla are “trying to stay ahead of a slower supply ramp this year and protect margins from an economic slowdown.”

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Before Musk’s warning, Tesla had about 5,000 job postings on LinkedIn, from sales reps in Tokyo and engineers at its new Gigafactory in Berlin to deep-learning scientists in Palo Alto. It had scheduled an online recruitment event for Shanghai on June 9 on its WeChat channel.

Musk’s call for employees to return to the office has already met with resistance in Germany. read more And his plan to cut jobs would face opposition in the Netherlands, where Tesla has its European headquarters, a union leader said.

“You can’t just fire Dutch workers,” said Hans Walthie, spokesman for the FNV union, adding that Tesla would have to negotiate with a works council on the terms of any departures.

In an email Tuesday, Musk had said Tesla employees would need to be in the office at least 40 hours a week to shut the door on any remote work. “If you don’t show up, we’ll assume you’ve resigned,” he said.

Musk has repeatedly pointed to the risk of a recession in recent comments.

At a mid-May conference in Miami Beach, he said from a distance, “I think we’re probably in a recession, and that recession is going to get worse.”

When Musk was asked on Twitter in late May if a recession was coming, he said: “Yes, but that’s actually a good thing. It’s been raining money on fools for too long.

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Other companies have cut jobs or are slowing or pausing hiring in the face of weakening demand.

Last month, Netflix (NFLX.O) said it laid off about 150 employees, mostly in the United States, and Peloton said in February it would cut 2,800 jobs. Meta Platforms (FB.O), Uber (UBER.N), and other tech companies have slowed hiring. Continue reading

In June 2018, Musk said Tesla would cut 9% of its workforce as the then-loss-making company struggled to ramp up production of Model 3 electric sedans, though data in its SEC filings showed that the cuts from new hires continued through year-end were more than compensated.

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Reporting by Hyunjoo Jin Additional reporting by John O’Donnel, Ju-min Park and Zoey Zhang Editing by John Stonestreet and Mark Potter

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