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

SAN FRANCISCO, June 3 (Reuters) – TESLA (TSLA.O) CEO Elon Musk said in emails seen by Reuters that CEO Elon Musk has a “very bad feeling” about the economy and needs to lay off about 10 per cent of the electric car maker’s salaried employees.

A letter he sent to executives on Thursday outlined his concerns and asked them to “pause all hiring worldwide.” The bleak outlook came two days after the billionaire asked employees to return to the workplace or leave, adding to a growing set of warnings from business leaders about the risks of a recession.

Tesla shares fell 9 percent in US trading on Friday after the Reuters report. Nasdaq high tech (nineteenth) It decreased by about 2%.

In another email to employees on Friday, Musk said Tesla will cut the number of paid employees by 10%, as it has become “overstaffed in many areas.” But, he said, “the number of hourly workers will rise.”

“Note, this does not apply to anyone who actually builds cars, batteries, or installs solar energy,” Musk wrote in the email seen by Reuters.

The SEC’s annual filing showed that nearly 100,000 people were employed at Tesla and its subsidiaries at the end of 2021. It did not detail the number of wage earners and hourly workers.

The Texas-based company could not be reached for comment.

Musk has warned in recent weeks of the risks of a recession, but his email ordering a hiring freeze and staff cut was the most direct and well-known message of its kind from the head of an automaker, while others described sky-high demand. Read more

“Elon Musk has a uniquely enlightened view of the global economy. We think his message would be highly credible,” Morgan Stanley analyst Adam Jonas said in a report.

Shanghai Lockdown

So far, demand for Tesla cars and other electric vehicles has remained strong and many of the traditional indicators of a decline – including increased dealer inventories and stimulus in the US – have not materialized.

But Tesla has struggled to resume production at its Shanghai plant after the COVID-19 shutdown led to costly outages.

“It’s always better to implement austerity measures in good times than in bad ones,” said Frank Schöpp, an analyst at Hanover-based Nord LP. “I see the comments as a forewarning and a precautionary measure.”

Musk’s bleak outlook reflects recent comments from executives including Jamie Dimon, CEO of JPMorgan Chase & Co., and Goldman Sachs Chairman John Waldron.

“There’s a hurricane on the road coming our way,” Damon said this week. Read more

Inflation in the United States is hovering at its highest levels in 40 years and causing a jump in the cost of living for Americans, while the Federal Reserve faces the difficult task of curbing demand enough to curb inflation while not causing a recession.

It was also not immediately clear what, if any, the implication was for Musk’s vision of his $44 billion offer to buy Twitter. (TWTR.N). US antitrust regulators paved the way for the deal on Friday, sending Twitter shares up 2%. Read more

Several analysts recently lowered Tesla’s price target, predicting a production loss at its Shanghai plant, a hub for China’s supply of electric vehicles and for export.

China made up just over a third of Tesla’s global deliveries in 2021, according to company disclosures and data from sales there. On Thursday, Daiwa Capital Markets estimated Tesla had about 32,000 orders awaiting delivery in China, compared to BYD’s 600,000 vehicles. (002594.SZ)its biggest electric competitor in that market.

“stop all hiring”

Before Musk’s warning, Tesla had about 5,000 jobs posted on LinkedIn from sales in Tokyo and engineers at its giant new factory in Berlin to deep learning scientists in Palo Alto. She had scheduled an online recruitment event for Shanghai on June 9 on her WeChat channel.

Musk’s demand for employees to return to the office has run into obstacles in Germany. A union leader said his plan to cut jobs would meet resistance in the Netherlands, where Tesla is based in Europe.

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

In an email on Tuesday, Musk said Tesla employees are required to stay in the office for at least 40 hours a week, to lock the door on any remote work. “If you don’t show up, we’ll assume you quit,” he said.

Jason Stomel, founder of tech talent agency Cadre, said a back-to-office note could be a way to get people to leave.

“(Musque) knows there’s a percentage of workers who won’t come back,” which he said would be cheaper for Tesla because there would be no need for a termination.

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

“I think we’re probably in a recession and the recession is only going to get worse,” he said, addressing a teleconference in mid-May in Miami Beach.

(Hyungu Jin reporting) Additional reporting by John O’Donnell, Jo Min Park, Zoe Zhang, Toby Sterling, Sarah Morland and Nevdita Ballou; Editing by John Stonestreet, Mark Potter, Nick Czyminsky and Lisa Schumaker

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