Elon Musk told Tesla Inc. employees that plans to cut 10% of jobs would only apply to salaried workers, according to Electrek, clarifying an earlier report that he had broadly discussed a layoff without specifics.
The chief executive officer said in an internal email that headcount would be reduced because Tesla has “become overstaffed in many areas,” the auto-focused news website reported.
Musk said in the same note that “this does not apply to anyone actually building cars, battery packs or installing solar,” according to Electrek. The hourly employee workforce will be expanded, according to the report.
The comments came several hours after Reuters reported that Musk told company executives he would reduce Tesla staff because he had a “super bad feeling” about the economy. The news sent Tesla’s shares down as much as 9.4% in New York trading.
Tesla said in its annual report that about 39% of roughly 100,000 workers were “production line employees.”
While it’s not clear if overall headcount will be reduced, Musk’s downbeat commentary marks a shift for the electric-vehicle maker. Tesla recently opened two vehicle assembly plants and notched record global sales volume in its most recent quarter, while Musk predicted “substantially higher” growth later this year.
The latest moves drew scorn from President Joe Biden, who dismissed the billionaire’s warnings about the economy and wished him luck with his firm’s adventures in space. They also caught some on Wall Street off guard, with Credit Suisse analyst Dan Levy calling the comments “a surprise to us given significant growth path” ahead for Tesla.
But coronavirus-related restrictions in China have crimped output at the company’s Shanghai plant, leading some analysts to question whether Tesla can meet its goal of 50% annual growth in deliveries. Cowen on Friday cut its estimate for the carmaker’s global deliveries to 1.28 million, down from a previous estimate of 1.35 million.
The news adds to a tumultuous stretch for Tesla and Musk, with the carmaker’s stock slumping since the executive struck a deal to acquire Twitter Inc. Anxiety about the global economy and the impact of China’s COVID-19 lockdown in Shanghai, where Tesla has a factory, have also weighed on the company, which has weathered worldwide supply shortages for components like chips better than most.
Musk also joined the heated debate around return to office this week, urging staff at Tesla to get back to their desks, or find work elsewhere.
“The more senior you are, the more visible must be your presence,” Musk wrote, adding that employees were “required to spend a minimum of 40 hours in the office per week.”
—With assistance from Katrina Nicholas.
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