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Elon Musk Plans To Reduce Tesla Workforce By 10%


04/06/2022


Elon Musk Plans To Reduce Tesla Workforce By 10%
Tesla CEO Elon Musk has a "very awful feeling" about the economy and believes the electric carmaker needs to eliminate approximately 10% of its salaried workforce, according to report by Reuters based on emails obtained by it 
 
On Thursday, he issued a note to executives outlining his worries and instructing them to "stop all hiring worldwide." The grim forecast comes only two days after the billionaire warned employees to return to work or leave, and it adds to a rising chorus of warnings from corporate executives about the chances of a recession.
 
Tesla shares plunged 9 per cent in US trading on Friday on the Reuters article. The Nasdaq, which is dominated by technology, was down roughly 2 per cent. 
 
Musk wrote in another email to employees on Friday that Tesla will reduce salaried personnel by 10% ""Many areas have grown overstaffed." "However, "hourly headcount will rise, "he said.
 
"Note, this does not apply to anyone actually building cars, battery packs or installing solar," Musk wrote in the email seen by Reuters.
 
According to its annual SEC report, Tesla and its subsidiaries employed about 100,000 workers at the end of 2021. It did not differentiate between salaried and hourly workers.
 
Musk has cautioned about the risks of a recession in recent weeks, but his email ordering a hiring block and staff reduction was the most direct and high-profile statement of its type from an automaker's CEO, with others expressing sky-high demand.
 
"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 Morgan Stanley, said in a report.
 
So far, demand for Tesla vehicles and other electric vehicles (EV) has been high, and many typical markers of a downturn, such as rising dealer inventories and incentives in the United States, have not materialised.
 
However, after COVID-19 lockdowns forced costly interruptions, 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 Hanover-based NordLB analyst Frank Schwope.
 
Musk's pessimistic attitude is consistent with previous statements from leaders such as JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.
 
This week, Dimon stated that a "storm is right out there down the road coming our way."
 
Inflation in the United States is near 40-year highs, raising the cost of living for Americans, while the Federal Reserve has the tough problem of dampening demand enough to control inflation while avoiding a recession.
 
It was also unclear what impact, if any, Musk's opinion would have on his $44 billion bid for Twitter. On Friday, US antitrust officials approved the acquisition, driving Twitter shares up 2 per cent.
 
Several analysts have recently reduced Tesla price predictions, citing decreased output at the company's Shanghai factory, which serves as a centre for EV supply to China and export.
 
According to business disclosures and sales data provided in China, China will account for slightly more than a third of Tesla's global deliveries in 2021. According to Daiwa Capital Markets, Tesla has approximately 32,000 orders awaiting delivery in China, compared to 600,000 vehicles for BYD, its larger EV competitor in that market.
 
Prior to Musk's warning, Tesla had about 5,000 job listings on LinkedIn, ranging from sales in Tokyo to engineers at its upcoming Berlin gigafactory to deep learning scientists in Palo Alto. On its WeChat channel, it had organised an online hiring event for Shanghai on June 9.
 
(Source:www.reuters.com)