Elon Musk wants to cut 10% of Tesla jobs, has 'super bad feeling' about economy

Mr Elon Musk earlier this week asked Tesla employees to return to the office or leave the company. PHOTO: REUTERS

SAN FRANCISCO (REUTERS, BLOOMBERG) - Tesla chief executive officer Elon Musk has a “super bad feeling” about the economy and wants to cut about 10 per cent of jobs at the electric carmaker, he said in an e-mail to executives on Thursday (June 2) seen by Reuters.

Tesla was not immediately available for comment.

Its shares fell 2.5 per cent in New York pre-market trading on Friday immediately after the news. Nasdaq futures were 0.6 per cent lower, while those on the S&P 500 dropped 0.3 per cent.

Tesla, which has electric vehicle factories in the United States, China and Berlin, employs around 99,290 staff worldwide, so culling 10 per cent of jobs could equate to losses approaching 10,000 people.

In an e-mail titled “pause all hiring worldwide,” Mr Musk said he had a “super bad feeling” about the economy.

In late May, when asked by a Twitter user whether the economy was approaching a recession, Mr Musk said, “Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.” 

The Austin, Texas-headquartered company cut its workforce by 7 per cent - 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.

Mr Musk’s latest stark warning of a potential recession and the knock-on effect for automakers is the most direct and high-profile forecast of its kind in the industry.

While concerns about the risk of a recession have grown, demand for Tesla cars and other electric vehicles has remained strong and many of the traditional indicators of a downturn - including increasing dealer inventories in the United States - have not materialised.

But Tesla has struggled to restart production at its Shanghai factory after Covid-19 lockdowns forced costly outages at the plant.

Mr Musk’s gloomy outlook echoes recent comments from executives including JPMorgan Chase CEO Jamie Dimon and Goldman Sachs president John Waldron.

A “hurricane is right out there down the road coming our way,” Mr Dimon said this week.

Inflation in the United States is hovering at 40-year highs and has caused a jump in the cost of living for Americans, while the Federal Reserve faces the difficult task of dampening demand enough to curb inflation while not causing a recession.

Before Mr Musk’s warning, Tesla had about 5,000 job postings on LinkedIn from sales in Tokyo and engineers in its new Berlin gigafactory to deep learning scientists in Palo Alto.

The EV maker produced a record 930,422 cars last year, and delivered 936,222, even despite a global chip shortage that has been ongoing for more than 12 months and Covid-19-related supply chain snarls.

Mr Musk’s e-mail came two days after the world’s richest man told employees to return to the workplace or leave the company.

On Tuesday, he told staff to return to the workplace or leave the company, a demand that has already faced pushback in Germany where the company has a new factory.

“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Mr Musk wrote in that e-mail.

“If you don’t show up, we will assume you have resigned.”

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