Tesla CEO Elon Musk has an “extremely bad premonition” of the economy and wants to cut about 10% of jobs in the electric car maker, he said in an email to executives, Reuters reported.
The announcement comes two days after the world’s richest man asked his employees to return to work or leave the company.
According to the annual documentation of the Securities and Exchange Commission, at the end of 2021, Tesla and its subsidiaries employed about 100,000 people.
Musk’s harsh warning of a potential recession and the aftermath for carmakers is the most direct and high-profile forecast of its kind in the industry.
Although fears of a recession have risen, demand for Tesla cars and other electric vehicles has remained high, and many traditional indicators of the decline – including growing dealer inventories in the United States – have not materialized.
But Tesla is struggling to resume production at its Shanghai plant after lockouts during the COVID-19 pandemic forced costly plant disruptions.
Musk’s grim predictions echo recent comments from executives, including JPMorgan Chase & Co. (JPM.N) CEO Jamie Dimon and Goldman Sachs President John Waldron.
“The hurricane is right there, down the road, and it’s approaching us,” Damon said this week.
Inflation in the United States has reached a 40-year high and caused a jump in the cost of living of Americans, and the Federal Reserve is facing the difficult task of reducing demand enough to curb inflation while not causing a recession.
Prior to Musk’s warning in an email titled “Pause to Hire Employees Around the World,” Tesla had about 5,000 job offers on LinkedIn, from sales in Tokyo and engineers at Berlin’s new gigafactory to scientists working for Berlin. with in-depth research in Palo Alto.
Musk’s request for employees to return to the office has already met with resistance in Germany.
“Everyone at Tesla is required to spend at least 40 hours a week in the office,” Musk wrote in an email Tuesday. “If you do not show up, we will assume that you have resigned.”
On Thursday, Musk also took part in a Twitter dispute with Australian technology billionaire and co-founder of Atlassian Plc Scott Farquard, who ridiculed the directive in a series of tweets as “something from the 1950s”.
Musk wrote on Twitter: “Recessions play a vital role in economic cleansing” in response to Farquard’s tweet, which encouraged Tesla employees to learn about remote work positions.
In late May, when asked by a Twitter user if the economy was approaching a recession, Musk said: “Yes, but it’s actually a good thing. It’s been raining money for fools for too long. Some bankruptcies are about to happen.”
Jason Stommel, founder of the Cadre Technology Talent Agency, said: “I think it’s likely to be a covert dismissal.”
“(Musk) knows that there is a certain percentage of workers who simply will not return,” which he said would be cheaper, as no compensation would be needed.
A few days ago, Musk announced that Tesla’s Open Day (Tesla AI Day) would not be held on August 19, but on September 30. The purpose of the event is for his company to persuade the best software and hardware engineers to join the corporation.
“Until then, we may have a ready-to-use prototype of Optimus,” the billionaire wrote on social media. Optimus is a project to create a humanoid robot that is a priority for Tesla.
“It could possibly be useful in solving the global labor shortage. Initially, it can be used to transport various things in factories,” said the entrepreneur. Earlier, he announced that the robot could be launched next year.
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