Musk has dire warning for economy, halts hiring at Tesla, may cut 10% of staff after telling them to work at the office or ‘pretend’ to work somewhere else
At the electric carmaker, better known as Tesla, there will be pausing hiring worldwide, while also job cuts are coming, says the CEO of the company and the world’s richest man, Elon Musk.
According to an email to executives seen by Reuters, Musk says that he has a “super bad feeling” about the economy and wants to cut about 10% of jobs at his company.
In premarket trading, shares of Tesla fell down by 3%.
This latest job cut news is coming just two days after the world’s richest man told employees to return to the workplace or leave the company for good.
At the end of 2021, Tesla had around 100,000 employees, according to its annual SEC filing.
Tesla had about 5,000 job postings on LinkedIn from sales in Tokyo and engineers at its new Berlin Gigafactory to deep learning scientists in Palo Alto, before Musk’s warning.
“Pause all hiring worldwide,” was the title of the email from Musk, said report.
Just a few days earlier, in another email, Musk said “Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” referring to those who are working remotely.
There have been pushbacks already in Germany, after Musk’s demand that staff return to the office.
When asked by a Twitter user, in late May, whether the economy was approaching a recession, Musk said: Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.”
Musk said in another email to employees that Tesla will be reducing salaried headcount by 10%, as it has become “overstaffed in many areas.” But “hourly headcount will increase.”
“Note, this does not apply to anyone actually building cars, battery packs or installing solar,” Musk wrote in the email, also reported.
“Elon Musk has a uniquely informed insight into the global economy. We believe that a message from him would carry high credibility,” Adam Jonas, an analyst at Morgan Stanley, said in a report.
Demand for Tesla cars and other electric vehicles (EV) has remained strong and many traditional indicators of a downturn have not materialized so far. This includes increasing dealer inventories and incentives in the United States.
But after COVID-19 lockdowns forced costly outages, Tesla has struggled to restart production at its Shanghai factory.
“It is always better to introduce austerity measures in good times than in bad times. I see the statements as a forewarning and a precautionary measure,” said Frank Schwope, a Hanover-based NordLB analyst.
Musk’s gloomy outlook echoes recent comments from executives including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.
Dimon said that a “hurricane is right out there down the road coming our way.”
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