Elon Musk wants to cut 10% of Tesla jobs

SAN FRANCISCO: Tesla CEO Elon Musk has a “super bad feeling” about the economy and needs to cut about 10% of jobs at the electric carmaker, he said in an email to executives seen by Reuters.

The message, sent on Thursday and titled “pause all hiring worldwide”, came two days after the billionaire told staff to return to the workplace or leave, and adds to a growing chorus of warnings from business leaders about the risks of a recession.

Tesla shares fell 9% in U.S. trade on Friday after the Reuters report. The tech-heavy Nasdaq (JCIX) was down about  2%.

In another email to employees on Friday, Musk said Tesla will be reducing salaried headcount by 10%, as Tesla has become “overstaffed in many areas.” But “hourly headcount will increase,” he said.

“Note, this does not apply to anyone actually building cars, battery packs or installing solar,” Musk wrote in the email seen by Reuters.

Almost 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, its annual SEC filing showed. It did not break down numbers of salaried and hourly workers.

The company was not immediately available for comment.

Musk has warned in recent weeks about the risks of recession, but his email ordering a hiring freeze and staff cuts was the most direct and high-profile message of its kind from the head of an automaker.

“Elon Musk has a uniquely informed insight into the global economy. We believe that a message from him would carry high credibility,” Adam Jonas, an analyst Morgan Stanley, said in a report.

“If the world’s largest EV company warns on jobs and the economy, investors should reconsider their forecasts on margins and top-line growth,” he said, citing the Shanghai lockdown, rising battery raw material costs and other factors.

So far, demand for Tesla cars and other electric vehicles (EV) has remained strong and many traditional indicators of a downturn – including increasing dealer inventories and incentives in the United States – have not materialized.

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