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

SAN FRANCISCO, June 3 (Reuters) – TESLA (TSLA.O) Elon Musk, CEO, said he has a “very bad feeling” about the economy and needs to lay off about 10% of the staff at the electric car maker, he said in an email to executives seen by Reuters.

The letter, sent Thursday titled “Pause for All Employment Worldwide,” came two days after the billionaire asked employees to return to the workplace or leave, and adds 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 about the risks of a recession, but his email ordering a hiring freeze and staff cut was the direct, most well-known message of its kind from the automaker’s boss.

“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.

US President Joe Biden, asked about Musk’s comments about the economy, said sarcastically that he wished Musk “a lot of luck” on his “journey to the moon.” Read more

Musk, who criticized the Biden administration for “marginalizing Tesla and SpaceX,” responded on Twitter: “Thank you, Mr. President!” It included a link indicating that in April 2021 NASA awarded a $2.9 billion contract to Musk’s SpaceX to build a spacecraft to bring astronauts to the Moon.

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.”

He noted that many automakers achieved record profits in 2021, but the economic situation is now more uncertain.

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.

Musk, the world’s richest man according to Forbes magazine, did not explain why he “feeled very badly” about the economic outlook in a brief email seen by Reuters.

Nor was it immediately clear what, if any, the implication, if any, of Musk’s vision of his $44 billion offer to buy Twitter would be. (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.

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.

Other companies have cut jobs, slowed or paused hiring amid weak demand.

Last month, Netflix (NFLX.O) It said it had laid off about 150 people, mostly in the United States, and Peloton said in February it would cut 2,800 jobs. ID pads (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 as the loss-making company at the time struggled to ramp up production of its Model 3 electric sedans, even though its SEC filings showed the cuts were more offset. Through recruitment by the end of the year.

(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 and Nick Czyminski

Our criteria: Thomson Reuters Trust Principles.