Musk feels “too bad” about the economy, Tesla needs to cut 10% of jobs

Tesla CEO Elon Musk has a “very bad feeling” for the economy and needs to cut the carmaker’s lead by 10%, he said in an email to executives seen by Reuters.

The message, sent on Thursday, entitled “Stop all hiring around the world,” came two days after the billionaire told staff to return to work or leave, adding to a growing chorus of warnings from business leaders about the risk of recession.

Tesla employed nearly 100,000 people at the company and its subsidiaries by the end of 2021, according to its annual SEC listing.

The company was not immediately available for comment.

Shares of Tesla fell by almost 3% in US trading before marketing on Friday and its shares in Frankfurt fell by 3.6% according to a Reuters report. The US Nasdaq futures NQcv1 turned negative, down 0.6%.

Musk has warned of the danger of a recession in recent weeks, but his email in which he ordered a freeze on hiring and a reduction in staff was the most direct and prominent message of its kind from the carmaker’s boss.

To date, demand for Tesla cars and other electric vehicles has remained high, and many of the traditional signs of a downturn – including growing dealerships and incentives in the United States – have not materialized.

But Tesla has struggled to resume production at its Shanghai plant after the closure of COVID-19 forced a costly shutdown at the plant.

“Many people share Musk’s bad feelings,” said Carsten Brzeski, international head of macroeconomic research at Dutch bank ING. “But we are not talking about a global recession. We expect the world economy to cool down by the end of the year. The United States will cool down, while China and Europe will not recover.”

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

“A hurricane is out there on the road,” Dimon said this week.

Inflation in the United States has been at a peak for 40 years and has led to an increase in the cost of living in the United States, while the US Federal Reserve is faced with the difficult task of reducing demand sufficiently to curb inflation but not cause a contraction.

Musk, the richest man in the world according to Forbes, did not elaborate on the reasons for his “extremely bad feeling” about the economic outlook in a short e-mail that Reuters saw.

Several analysts have recently lowered price targets for Tesla and predicted slower delivery due to Chinese closure and lost production at the Shanghai plant, a center that supplies electric cars to China and for export.

China accounted for more than a third of Tesla’s international deliveries in 2021, according to company data and sales data.

Wedbush Securities analyst Daniel Ives tweeted that it seemed as if Musk and Tesla were “trying to be ahead of a slower delivery this year and keep margins ahead of the recession.”

“Pause all recruitment”

To Musk’s warning, Tesla had about 5,000 jobs on LinkedIn, from sales in Tokyo and engineers at the new crater factory in Berlin to deep-learning scientists in Palo Alto. It had organized an online recruitment event for Shanghai on June 9 on its WeChat channel.

Musk’s demand for staff to return to the office has already been tightened in Germany.

“Everyone at Tesla needs to spend at least 40 hours a week in the office,” Musk wrote in an email on Tuesday. “If you do not show up, we assume you have resigned.

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

Addressing a conference in Miami Beach in the distance in mid-May, Musk said: “I think we are probably in a recession and that recession will get worse. He added: “It will probably be difficult to go, I do not know, a year, maybe 12 to 18 months, is usually the time it takes to correct.

At the end of May, when a Twitter user asked him if the economy was approaching a recession, Musk said: “Yes, but this is really good. It’s been raining money on fools for too long. Some bankruptcies need to happen.”

Musk also took to Twitter on Thursday with Australian tech billionaire and founder of Atlassian Plc TEAM.O, Scott Farquhar, who mocked the back-to-office directive as “like something from the 1950s.”

Musk tweet: “The recession serves an important economic clean-up,” in response to a tweet from Farquhar urging Tesla employees to look at their teleworking locations.

Jason Stomel, founder of the technical talent office Cadre, said of the directive to return to work: “I think there is a possibility that this is just a disguised dismissal, which means they can get rid of people who have resigned, or without having to actually do it. get fired. “

“(Musk) knows that there is a percentage of employees who just do not intend to return,” which he said was cheaper because there was no need for retirement.

Musk feels “too bad” about the economy, Tesla needs to cut 10% of jobs

Source link Musk feels “too bad” about the economy, Tesla needs to cut 10% of jobs

Back to top button