Exclusive: Elon Musk wants to cut 10% on Tesla jobs

  • Tesla will employ about 100,000 people by the end of 2021
  • Musk warned employees Tuesday to return to the office or leave
  • U.S. executives are increasingly sounding dark about the economy

San Francisco, June 3 (Reuters) – Tesla (TSLA.O) CEO Elon Musk has an “extremely bad feeling” about the economy, and he said in an email to executives he saw at Reuters that the electric car maker’s staff should be cut by 10%.

The message, sent out on Thursday, came two days after the millionaire told employees to return or leave the workplace under the headline “Stop hiring all over the world” and raised growing warnings from business leaders about the risks of a recession.

Shares of Tesla fell 9% in U.S. trading on Friday after a Reuters report. Technology is very Nasdaq (.IXIC) About 2% less.

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In another email sent to employees on Friday, Musk said Tesla would reduce the number of salaried employees by 10% as it became “more staff in many areas.” But, “the number of heads increases once an hour,” he said.

“Note, this does not really apply to cars, battery packs or anyone installing solar,” Musk wrote in an Reuters email.

Its annual SEC filing shows that by the end of 2021 Tesla and its subsidiaries will have hired nearly 100,000 people. It does not divide wages by the number of hourly workers.

Tesla’s expanding payroll

The Texas-based company was not immediately available for comment.

Musk has warned of the dangers of a recession in recent weeks, but the email of the hiring freeze and the order to cut staff is a very direct and high-quality message from the head of an automaker.

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“Elon Musk has a uniquely informed insight into the world economy. We hope a message from him will be more credible,” said Adam Jonas, a researcher and Morgan Stanley, in a statement.

U.S. President Joe Biden has teased Musk for listening to his comments on the economy, wishing him “a lot of luck” in his “journey to the moon.” read more

Musk, who criticized the Biden administration for “marginalizing Tesla & SpaceX”, responded on Twitter: “Thank you, Mr. President!” He added that NASA had in April 2021 awarded a $ 2.9 billion contract to SpaceX, Musk’s space agency, to build a spacecraft to bring astronauts to the moon.

Shanghai Lockdown

So far, demand for Tesla cars and other electric vehicles (EVs) has been strong, and many traditional indicators of decline – including rising dealer inventory and incentives in the United States – have not worked.

But after COVID-19 locks forced costly malfunctions, Tesla struggled to restart production at its Shanghai plant.

“It’s always better to introduce austerity measures than good times. I see reports as a precautionary and precautionary measure,” said Frank Schwope, a Hanover – based NordLB analyst.

Many car makers made record profits in 2021, but he noted that the economic situation is now very uncertain.

Musk’s dark vision echoes recent comments from executives, including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs chairman John Waltron.

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“There’s a hurricane coming our way,” Timon said this week. read more

Inflation in the United States has been at a 40-year high and has caused a rise in the cost of living for Americans, while the Federal Reserve faces the daunting task of reducing enough to control inflation without causing a recession.

Musk, the world’s richest man, according to Forbes, did not elaborate on the reasons for his “worst feeling” about the economic outlook in a brief email to Reuters.

It was not immediately clear what impact Musk’s vision would have on the $ 44 billion bid for Twitter. (TWTR.N). U.S. hopeful regulators allowed way for a deal on Friday, with Twitter raising its stake by 2%. read more

Many analysts have recently lowered price targets for Tesla, which has forecast lost production at its Shanghai plant, which is the hub for supplying and exporting EVs to China.

China will account for a third of Tesla’s global distributions by 2021, according to company data and sales data there. As of Thursday, Daiwa Capital Markets estimates that Tesla has about 32,000 orders awaiting delivery in China, compared to 600,000 vehicles for BYD. (002594.SZ)Its biggest EV competitor in that market.

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‘Stop all hiring’

Prior to Musk’s warning, Tesla had about 5,000 job posts on the LinkedIn from sales in Tokyo and engineers at its new Berlin Gigafactory to in-depth learning scientists at Palo Alto. It had planned an online hiring event for Shanghai on June 9 on its WeChat channel.

Musk’s demand that employees return to office has already met with backlash in Germany. Read more

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“You can’t just lay off Dutch workers,” said Hans Walti, a FNV union spokesman.

In a Tuesday email, Musk said Tesla employees must be in the office at least 40 hours a week and close the door on any remote work. If you do not come, we will assume that you have resigned, he said.

Musk has repeatedly mentioned the risk of recession in recent comments.

Speaking at a televised conference in mid-May on Miami Beach, he said: “We’ll probably have a recession and that recession will get worse.”

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Other companies are cutting back on jobs or slowing down or suspending hiring as demand declines.

Last month, Netflix (NFLX.O) It has laid off about 150 people, mostly in the United States, and Below said it would cut 2,800 jobs in February. Meta platforms (FB.O)Uber (UBER.N) And other technology companies have slowed hiring. read more

In June 2018, Musk said Tesla would cut 9% of its workforce, while the loss-making company struggled to increase emissions of Model 3 electric sedans, although its SEC filings show reductions by hiring by the end of the year.

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Additional Reporting by John O’Donnell, Ju-Min Park, Choi Zhang, Toby Sterling and Sarah Morland and Nivedita Balu by Hoon Joo Jin; Editing by John Stone Street, Mark Potter and Nick Jiminski

Our standards: Thomson Reuters Trust Principles.

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