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

SAN FRANCISCO, June 3 (Reuters) – Tesla (TSLA.O) CEO Elon Musk has a “super bad feeling” concerning the financial system and wishes to cut about 10% of jobs on the electrical carmaker, he stated in an electronic mail to executives seen by Reuters.

The message, despatched on Thursday and titled “pause all hiring worldwide”, got here two days after the billionaire advised workers to return to the office or go away, and provides to a rising refrain of warnings from enterprise leaders concerning the dangers of recession.

Almost 100,000 individuals have been employed at Tesla and its subsidiaries on the finish of 2021, its annual SEC submitting confirmed.

The firm was not instantly out there for remark.

Tesla shares fell almost 5% in U.S. pre-market commerce on Friday and its Frankfurt-listed inventory was down 3.6% after the Reuters report. U.S. Nasdaq futures turned unfavourable and have been buying and selling 1% decrease.

Musk has warned in latest weeks concerning the dangers of recession, however his electronic mail ordering a hiring freeze and workers cuts was probably the most direct and high-profile message of its variety from the top of an automaker.

So far, demand for Tesla vehicles and different electrical autos (EV) has remained sturdy and lots of conventional indicators of a downturn – together with growing seller inventories and incentives within the United States – haven’t materialized.

But Tesla has struggled to restart manufacturing at its Shanghai manufacturing unit after COVID-19 lockdowns compelled expensive outages.

“It is always better to introduce austerity measures in good times than in bad times. I see the statements as a forewarning and a precautionary measure,” stated Hanover-based NordLB analyst Frank Schwope.

Many carmakers achieved file earnings in 2021, however the financial scenario is now extra unsure, he famous.

Musk’s gloomy outlook echoes latest feedback from executives together with JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.

A “hurricane is right out there down the road coming our way,” Dimon stated this week. learn extra

Inflation within the United States is hovering at 40-year highs and has precipitated a leap in the fee of residing for Americans, whereas the Federal Reserve faces the troublesome activity of dampening demand sufficient to curb inflation whereas not inflicting a recession.

Musk, the world’s richest man in accordance to Forbes, didn’t elaborate on the explanations for his “super bad feeling” concerning the financial outlook within the transient electronic mail seen by Reuters.

It was additionally not instantly clear what implication, if any, Musk’s view would have for his $44-billion bid for Twitter (TWTR.N). U.S. antitrust regulators cleared the deal on Friday, sending Twitter shares up almost 2% in pre-market buying and selling. learn extra

Several analysts have cut value targets for Tesla not too long ago, forecasting misplaced output at its Shanghai plant, a hub supplying EVs to China and for export.

China accounted for simply over a 3rd of Tesla’s world deliveries in 2021, in accordance to firm disclosures and knowledge launched on gross sales there. On Thursday, Daiwa Capital Markets estimated Tesla had about 32,000 orders awaiting supply in China, in contrast to 600,000 autos for BYD (002594.SZ), its bigger EV rival in that market.

Wedbush Securities analyst Daniel Ives stated in a tweet it appeared Musk and Tesla have been “trying to be ahead of a slower delivery ramp this year and preserve margins ahead of an economic slowdown.”

‘PAUSE ALL HIRING’

Before Musk’s warning, Tesla had about 5,000 job postings on LinkedIn from gross sales in Tokyo and engineers at its new Berlin gigafactory to deep studying scientists in Palo Alto. It had scheduled a web based hiring occasion for Shanghai on June 9 on its WeChat channel.

Musk’s demand that workers return to the workplace has already confronted pushback in Germany. learn extra And his plan to cut jobs would face resistance within the Netherlands, the place Tesla has its European headquarters, a union chief stated.

“You can’t just fire Dutch workers,” stated FNV union spokesperson Hans Walthie, including Tesla would have to negotiate with a labor union on phrases for any departures.

In a Tuesday electronic mail, Musk had stated Tesla workers have been required to be within the workplace for a minimal of 40 hours per week, closing the door on any distant work. “If you don’t show up, we will assume you have resigned,” he stated.

Musk has referred to the chance of a recession repeatedly in latest feedback.

Remotely addressing a convention in mid-May in Miami Beach, he stated: “I think we are probably in a recession and that recession will get worse.”

Other corporations have cut jobs or are slowing or pausing hiring amid weakening demand.

Last month, Netflix (NFLX.O) stated it had laid off about 150 individuals, principally within the United States, and Peloton stated in February it will cut 2,800 jobs. Meta Platforms (FB.O), Uber (UBER.N) and different expertise corporations have slowed hiring. learn extra

In June 2018, Musk stated Tesla would cut 9% of its workforce because the then-loss-making firm struggled to ramp up output of Model 3 electrical sedans, though knowledge in its SEC filings confirmed reductions have been greater than offset by hiring by 12 months finish.

Reporting by Hyunjoo Jin
Additional reporting by John O’Donnel, Ju-min Park, Zoey Zhang, Toby Sterling and Sarah Morland; modifying by John Stonestreet and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.