Tesla CEO Elon Musk has ordered massive job cuts at the automaker, saying he has a “super bad feeling” about the economy.
An email to company executives about the move was seen by Reuters. It also told Tesla managers to “pause all hiring worldwide.”
Musk set a target of cutting 10 percent of Tesla’s jobs, Reuters reported. Roughly 100,000 people work for Tesla around the globe, which would mean about 10,000 job cuts to hit the 10 percent mark.
According to MarketWatch, Tesla stock dropped about 4 percent in pre-market trading after news of the memo hit.
The order to slash jobs came days after a memo came to light in which Musk ordered Tesla employees to return to in-person work or lose their jobs.
Everyone eats same food, uses same restrooms, etc – no executive chef or other ivory tower stuff.
There shouldn’t be this workers vs management two-class system. Everyone is a worker.
— Elon Musk (@elonmusk) June 2, 2022
Although Tesla sales have been strong, Musk is not the only one anticipating hard times to come.
“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 global recession. We expect a cooling of the global economy towards the end of the year. The U.S. will cool off, while China and Europe are not going to rebound,” he said.
JPMorgan Chase & Co CEO Jamie Dimon this week shared his look at the future of the economy saying a “hurricane is right out there down the road coming our way.”
Wedbush Securities analyst Daniel Ives said Musk and Tesla were “trying to be ahead of a slower delivery ramp this year and preserve margins ahead of an economic slowdown.”
The company had major layoffs in 2017, cut 9 percent of employees in June 2018 and then cut another 7 percent in January 2019. Another wave of cuts came in April 2020 at the dawn of the pandemic.
Musk has voiced his concern for the economy.
“I think we are probably in a recession and that recession will get worse,” he said last month.
“It’ll probably be some tough going for, I don’t know, a year, maybe 12 to 18 months, is usually the amount of time that it takes for a correction to happen,” he said.
Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.
Also, all the Covid stay-at-home stuff has tricked people into thinking that you don’t actually need to work hard. Rude awakening inbound!
— Elon Musk (@elonmusk) May 27, 2022
Musk had also commented about a recession in a tweet last month, saying a recession “is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.”
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