Elon Musk feels ‘super bad’ about the economy and has to cut 10% of Tesla jobs
Tesla CEO Elon Musk has a ‘super bad feeling’ about the economy and needs to cut around 10% of jobs at the electric car maker, he said in an email to executives seen by Reuters.
The message, sent on Thursday and titled ‘suspend all hiring globally’, came two days after the billionaire told staff to return to work or leave, and adds to a growing chorus of warnings from chiefs company on the risks of recession.
Tesla employed nearly 100,000 people at the company and its subsidiaries at the end of 2021, according to its annual filing with the SEC.
The company was not immediately available for comment.
Shares of Tesla fell nearly 3% in premarket trading in the United States on Friday and its Frankfurt-listed stock fell 3.6% after the Reuters report. US Nasdaq futures turned negative and were trading down 0.6%.
Musk has warned in recent weeks of the risk of recession, but his email ordering a hiring freeze and staff cuts was the most direct and high-profile message of its kind from the head of a Car manufacturer.
So far, demand for Tesla cars and other electric vehicles has remained strong, and many of the traditional indicators of a slowdown — including increased dealer inventory and U.S. incentives — have failed to materialize. .
But Tesla has struggled to restart production at its Shanghai factory after Covid-19 shutdowns forced costly outages at the factory.
“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 cool towards the end of the year. The United States will calm down, while China and Europe will not rebound. “
Musk’s bleak outlook echoes recent comments from executives including JPMorgan Chase CEO Jamie Dimon and Goldman Sachs Chairman John Waldron.
A “hurricane is right out there on the road coming our way,” Dimon said this week.
Inflation in the United States is hitting 40-year highs and has caused an increase in the cost of living for Americans, while the Federal Reserve faces the difficult task of reining in demand enough to dampen inflation without causing of recession.
Musk, the world‘s richest man according to Forbes, did not elaborate on the reasons for his “super bad feeling” about the economic outlook in the brief email seen by Reuters.
A number of analysts have recently cut Tesla’s price targets, predicting slower deliveries due to Chinese lockdowns and the loss of production at its Shanghai factory, a hub supplying electric vehicles to China and the rest of the world. export.
China accounted for just over a third of Tesla’s global shipments in 2021, according to company disclosures and published sales data there.
Wedbush Securities analyst Daniel Ives said in a tweet that it appeared Musk and Tesla were “trying to anticipate a slower delivery ramp this year and preserve margins ahead of an economic downturn.”
“Suspend all hiring”
Prior to Musk’s warning, Tesla had around 5,000 job postings on LinkedIn, from sales in Tokyo and engineers at its new Berlin gigafactory to deep learning scientists in Palo Alto. He had scheduled an online recruitment event for Shanghai on June 9 on his WeChat channel.
Musk’s request for staff to return to the office has already been rebuffed in Germany.
“Everyone at Tesla is required to spend at least 40 hours in the office per week,” Musk wrote in his Tuesday email. “If you don’t show up, we’ll assume you quit.”
Musk has repeatedly raised the risk of recession in recent comments.
Speaking remotely at a conference in mid-May in Miami Beach, Musk said: “I think we’re probably in a recession and the recession is going to get worse.” He added: “It will probably be difficult for, I don’t know, a year, maybe 12 to 18 months, that’s usually the time it takes for a correction to happen.”
In late May, when asked by a Twitter user if the economy was nearing a recession, Musk replied, “Yeah, but that’s actually a good thing. It’s been raining for too long. money on fools. Some bankruptcies have to happen.”
Musk also engaged in a Twitter spat on Thursday with Australian tech billionaire and Atlassian Plc co-founder Scott Farquhar, who derided the back-to-office directive as “like something out of the 1950s.”
Musk tweeted, “recessions perform a vital economic cleansing function,” in response to a tweet from Farquhar that encouraged Tesla employees to lean into its remote workstations.
Jason Stomel, founder of tech talent agency Executive, said of the return-to-work directive, “I think it’s possible it was just a constructive dismissal, which means that they are able to get rid of people with attrition, or without having to do a layoff.”
“(Musk) knows there’s a percentage of workers who just won’t come back,” which he says would be cheaper because no severance would be needed.