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Exclusive: Tesla CEO Elon Musk feels'super awful' about the economy and needs to lay off 10% of salaried employees

Image: Reuters Berita 24 English -  Elon Musk , the CEO of Tesla, has a "very awful feeling" about the economy and needs to lay of...

Image: Reuters

Berita 24 English - Elon Musk, the CEO of Tesla, has a "very awful feeling" about the economy and needs to lay off approximately 10% of the company's salaried employees, according to emails seen by Reuters.

On Thursday, he issued a note to executives outlining his worries and instructing them to "stop all hiring worldwide." The bleak forecast comes 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 recession's dangers.

Following the Reuters article, Tesla shares plunged 9% in U.S. trading on Friday. The Nasdaq, which is heavily weighted in technology, was down roughly 2%.

Musk wrote in another email to employees on Friday that Tesla will reduce salaried personnel by 10%, as it has done in the past "In many areas, we've gotten "overstaffed."

"However, the hourly headcount will rise, "he stated

In an email seen by Reuters, Musk said, "Note, this does not apply to anyone actually producing cars, battery packs, or installing solar."

Tesla and its subsidiaries employed about 100,000 employees at the end of 2021, according to the company's annual SEC report. It did not differentiate between salaried and hourly workers.

The company, which is based in Texas, did not respond to a request for comment right away.

Musk has cautioned about the chances of recession in recent weeks, but his email ordering a hiring block and staff reduction was the most direct and high-profile statement of its sort from an automaker's CEO, with others expressing astronomically high demand.

"Elon Musk has an unrivaled understanding of the global economy. We feel a message from him would be quite credible "Morgan Stanley analyst Adam Jonas stated in a report.


So far, demand for Tesla cars and other electric vehicles (EVs) has remained high, and many usual markers of a slowdown, such as rising dealer inventories and incentives in the US, have not materialized.

However, after costly interruptions caused by COVID-19 lockdowns, Tesla has failed to restart production at its Shanghai factory.

"It is always preferable to impose austerity measures in good times rather than bad. The statements, in my opinion, are a forewarning and a preventative measure "Frank Schwope, a NordLB analyst in Hanover, agreed.

Musk's pessimistic prognosis reflects previous remarks from leaders such as Jamie Dimon, CEO of JPMorgan Chase & Co, and John Waldron, President of Goldman Sachs.

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, producing a rise in the cost of living for Americans, while the Federal Reserve has the tough task of reducing demand enough to keep inflation in check without triggering a recession.

It was also unclear what, if any, implications Musk's viewpoint would have for his $44 billion bid for Twitter. On Friday, antitrust regulators in the United States approved the merger, pushing Twitter's stock up 2%.

Several analysts have lately lowered their Tesla price targets, citing reduced output at the company's Shanghai factory, which serves as a hub for EV production in China and for export.

According to business filings and data on sales in China, China accounted for slightly over a third of Tesla's global deliveries in 2021. On Thursday, Daiwa Capital Markets estimated that Tesla had approximately 32,000 orders in China awaiting delivery, compared to 600,000 for BYD, its larger EV competitor in that market.


Tesla had approximately 5,000 job listings on LinkedIn before Musk's warning, ranging from sales in Tokyo to engineers at its upcoming Berlin gigafactory to deep learning scientists in Palo Alto. On June 9, it announced an online hiring event for Shanghai on its WeChat channel.

Musk's insistence that employees return to work has already been met with opposition in Germany. And, according to a union leader, his plan to slash employees would find opposition in the Netherlands, where Tesla has its European headquarters.

"You can't just fire Dutch workers," said FNV union representative Hans Walthie, adding that any departures would have to be negotiated with a labor union.

Musk said in a Tuesday email that Tesla staff must spend a minimum of 40 hours per week in the office, putting an end to all remote work. "We'll think you've resigned if you don't show up," he said.

The return-to-office memo, according to Jason Stomel, founder of digital talent agency Cadre, could be a strategy to entice individuals to leave.

"(Musk) understands there's a percentage of workers who aren't going to return," he added, adding that this would save Tesla money because no severance would be required.

In recent comments, Musk has alluded to the possibility of a recession.

"I believe we are probably in a recession, and that recession will grow worse," he stated remotely from a conference in Miami Beach in mid-May.

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