Tesla tycoon Elon Musk has a “super bad feeling” about the economy and needs to cut about 10 per cent of jobs at the electric car manufacturer, he said in an email to executives.
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, the company’s annual SEC filing showed. No one at Tesla was available for comment.
Tesla shares fell nearly 5 per cent in US pre-market trade on Friday and its Frankfurt-listed stock was down 3.6 per cent. US Nasdaq futures turned negative and were trading 1 per cent lower.
Musk has warned in recent weeks about the risk 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 materialised.
But Tesla has struggled to restart production at its Shanghai factory after Covid-19 lockdowns forced costly 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,” said Hanover-based NordLB analyst Frank Schwope.
Many carmakers achieved record profits in 2021 but the economic situation is now more uncertain, he noted.
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”, 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.
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 to executives.
It was also not immediately clear what implication Musk’s view would have for his takeover 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.
Musk has referred to the risk of a recession repeatedly in recent comments. Remotely addressing a conference in mid-May in Miami Beach, he said: “I think we are probably in a recession and that recession will get worse.”
Last month, Netflix said it had laid off about 150 people, mostly in the United States, and Peloton said in February it would cut 2,800 jobs.
