Elon Musk has a ‘super bad feeling’ about the economy and says Tesla needs to cut staff by 10%
Tesla Inc. Chief Executive Officer Elon Musk said the electric carmaker needs to cut staff by around 10%, noting he had a “super bad feeling” about the economy, according to an internal email seen by Reuters.
The email, titled “pause all hiring worldwide,” was sent to Tesla executives on Thursday, according to the report.
Representatives from Tesla didn’t immediately respond to an email seeking comment Friday.
The billionaire executive earlier this week urged everyone at electric vehicle manufacturer back to the office, saying in emails to staff that employees were “required to spend a minimum of 40 hours in the office per week.”
“The more senior you are, the more visible must be your presence,” Musk wrote. “That is why I lived in the factory so much — so that those on the line could see me working alongside them. If I had not done that, Tesla would long ago have gone bankrupt.”
Tesla, which has EV factories in the US, China and Berlin, employs around 99,290 staff worldwide, so culling 10% of jobs could equate to losses approaching 10,000 people. The Austin, Texas-headquartered company cut its workforce by 7% — or more than 3,000 jobs — in early 2019, warning that the “road ahead is very difficult” in making electric cars more affordable for the mass market.
The EV maker produced 930,422 cars last year, and delivered 936,222, a record even despite a global chip shortage that’s been ongoing for more than 12 months and Covid-related supply chain snarls. In China, Tesla’s second most important market after the US, the company’s Shanghai factory was shut for three weeks in April. It generally pumps out about 2,100 cars a day.
Tesla shares slumped as much as 2.7% in US pre-market trading. US stock-index futures also turned lower after the Reuters report, with contracts on the Nasdaq 100 sliding 0.5%.
Economic growth in the US looks to have downshifted in recent weeks in the face of headwinds that include rising interest rates and inflation, the Federal Reserve said earlier this week. Price gains may be moderating in parts of the country as households and businesses navigate everything from higher rates to the Russian invasion of Ukraine and ongoing disruptions from Covid infections.
In China, meanwhile, the government is pulling out all stops to spur economic growth as Covid outbreaks and lockdowns crush consumer confidence. Part of that plan involves getting consumers to buy more cars, with authorities last month outlining sales tax reductions for passenger cars that will amount to around 60 billion yuan ($9 billion).
A wish to cut jobs at Tesla, just one of several companies Musk heads along with Space Exploration Technologies Corp., or SpaceX, comes as his attempt to take over Twitter Inc. flounders. Musk, the world’s richest man, has repeatedly cast doubt over whether the acquisition will be completed, even though the parties had agreed to do so this year.
Musk became Twitter’s largest individual shareholder in early April with more than 9% of the social media platform. On April 25, Twitter and Musk said they’d reached an agreement for the billionaire to acquire the company and take it private.
Shares in Tesla are down 27% this year.
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.