Elon Musk wants to lay off 10% of Tesla employees for fear of recession – Link

Musk said Tesla employees needed to be in the office for a minimum of 40 hours a week.

Elon Musk said on Thursday that he will need to cut about 10% of the workforce at Tesla, his electric car maker. The information was obtained by Reuterswho had access to an email sent by the company’s president.

The message, titled “Pause All Hiring Worldwide,” came two days after the billionaire told employees to return to the workplace or resign, and it adds to a growing chorus of warnings from business leaders about the risks. of recession.

Nearly 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, showed an annual report by the SEC, equivalent to the Securities and Exchange Commission (CVM) in Brazil. The company was not immediately available for comment.

On the news, Tesla shares fell nearly 5% in the US premarket on Friday, and shares listed in Frankfurt fell 3.6% after the report.

Musk has warned in recent weeks of recession risks, but his email ordering a hiring freeze and staff cuts was the most direct and explicit message from the automaker’s boss.

So far, demand for Tesla cars and other electric vehicles has remained strong and many traditional indicators of a slowdown — including rising inventories and dealer incentives in the United States — have not materialized.

But Tesla has struggled to restart production at its Shanghai factory after Covid-19 lockdowns forced financially costly disruptions for the company.

“It’s always better to introduce austerity measures in good times than in bad times. I see the statements as an early warning and a precautionary measure,” said Frank Schwope, an analyst at NordLB based in Hanover.

Many automakers achieved record profits in 2021, but the economic situation is now more uncertain, he noted.

Musk’s grim outlook echoes recent comments from executives including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs chairman John Waldron.

A “hurricane is just over the road heading our way,” Dimon said this week.

Inflation in the United States is reaching 40-year highs and has caused the cost of living to jump for Americans, as the Federal Reserve faces the difficult task of dampening demand enough to contain inflation without causing a recession.

Musk, the richest man in the world according to the Forbesdid not detail the reasons for his “bad feeling” about the economic outlook in the brief email seen by Reuters.

It was also not immediately clear what implication, if any, Musk’s vision would have for his $44 billion Twitter bid. U.S. antitrust regulators approved the deal on Friday, sending Twitter shares up nearly 2% in premarket trading.

Several analysts have lowered price targets for Tesla recently, predicting lost production at its Shanghai factory, a hub that supplies electric vehicles to China and for export.

China accounted for just over a third of Tesla’s global deliveries in 2021, according to company disclosures and released sales data in the country. On Thursday, Daiwa Capital Markets estimated that Tesla had about 32,000 orders awaiting delivery in China, compared with 600,000 vehicles from BYD, a rival electric vehicle company in that market.

Wedbush Securities analyst Dan Ives said in a tweet that it looked like Musk and Tesla were “trying to stay ahead of a slower delivery ramp this year and preserve margins before an economic downturn.”

‘Pause in all signings’

Before Musk’s warning, Tesla had about 5,000 jobs on LinkedIn, ranging from positions in sales in Tokyo and engineers at its new mega factory in Berlin to deep learning scientists in Palo Alto. Additionally, the company had scheduled an online hiring event for Shanghai on June 9 on its WeChat channel.

Musk’s demand that employees return to the office has already met with resistance in Germany. And his plan to cut jobs would face resistance in the Netherlands, where Tesla is based in Europe, a union leader said.

“You can’t just fire Dutch workers,” said FNV union spokesman Hans Walthie, adding that Tesla would have to negotiate with a union the terms of any exit.

In a Tuesday email, Musk said Tesla employees needed to be in the office a minimum of 40 hours a week, closing the door on any remote work. “If you don’t show up, let’s assume you quit,” he said.

Musk has repeatedly referred to the risk of recession in recent comments. Speaking remotely at a mid-May conference in Miami Beach, he said, “I think we’re probably in a recession and this recession is going to get worse.”