TEXAS: Tesla CEO Elon Musk has a “super bad feeling” about the economy and needs to cut about 10% of jobs at the electric carmaker.
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.
Almost 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, its annual SEC filing showed.
The company was not immediately available for comment. –Agencies
Tesla shares fell nearly 3% in US pre-market trade on Friday and its Frankfurt-listed stock was down 3.6% after the media reports. US Nasdaq futures turned negative and were trading 0.6% lower.
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.
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.
“Musk’s bad feeling is shared by many people,” said Carsten Brzeski, global head of macroeconomic research at Dutch bank ING.
“But we are not talking about a global recession. We expect a cooling of the global economy towards the end of the year. The US will cool off, while China and Europe are not going to rebound.”
Musk’s gloomy outlook echoes recent comments from executives including 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 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.
Musk, the world’s richest man according to Forbes, did not elaborate on the reasons for his “super bad feeling” about the economic outlook in the brief email.
It was also not immediately clear what implication, if any, Musk’s view would have for his $44-billion bid for Twitter.
Several analysts have cut price targets for Tesla recently, forecasting lost output at its Shanghai plant, a hub supplying EVs to China and for export.
China accounted for just over a third of Tesla’s global deliveries in 2021, according to company disclosures and data released on sales there. On Thursday, Daiwa Capital Markets estimated Tesla had about 32,000 orders awaiting delivery in China, compared to 600,000 vehicles for BYD, its larger EV rival in that market.
Wedbush Securities analyst Daniel Ives said in a tweet it appeared Musk and Tesla were “trying to be ahead of a slower delivery ramp this year and preserve margins ahead of an economic slowdown.”
