Pessimistic about the economy, Musk wants to cut 10% of Tesla jobs

Tesla CEO Elon Musk has a “very bad feeling” about the economy and wants to cut about 10% of jobs at the electric car maker, he said in an email to executives seen by Reuters.

The message came two days after the world’s richest man told employees to return to face-to-face work or leave the company.

Tesla employed about 100,000 people at the company and its subsidiaries at the end of 2021, according to its annual US filing.

Musk’s strong warning of a possible recession and the ripple 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 slowdown – including rising US dealer inventories – have not materialised.

But Tesla has struggled to restart production at its Shanghai factory after lockdowns forced disruptions.

Musk’s bleak outlook echoes recent comments from executives including JPMorgan Chase CEO Jamie Dimon and Goldman Sachs chairman John Waldron. A “hurricane is just around the corner heading our way,” Dimon said this week.

Inflation in the United States is hovering at 40-year highs and has caused the cost of living to jump for Americans, while the Federal Reserve, the country’s central bank, faces the difficult task of dampening demand enough to contain inflation without causing a recession.

“Pause all hires”

Prior to Musk’s warning, which came in an email titled “Pause All Hiring Worldwide,” Tesla had about 5,000 job openings on LinkedIn, from engineers at its new factory in Berlin to scientists in Palo Alto. .

Musk’s demand that employees return to the office has already met with resistance in Germany.

“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Musk wrote in his Tuesday email. “If you don’t show up, let’s assume you resigned.”

Musk was also involved in a Twitter argument with Australian tech billionaire and Atlassian Plc co-founder Scott Farquhar, who derided the directive in a series of tweets as being “something from the 1950s”.

Musk wrote, “Recessions serve a vital economic cleansing function” in response to a tweet by Farquhar that encouraged Tesla employees to look into their remote jobs.

In late May, when asked by a Twitter user if the economy was approaching a recession, Musk said: “Yes, but this is actually a good thing. It’s been raining money on fools for a long time. Some bankruptcies have to happen.”