Elon Musk cites ‘super bad feeling’ about economy, orders 10% of jobs cut at Tesla

Citing a “super bad feeling” about the economy, Tesla CEO Elon Musk has ordered a global hiring freeze and said the electric carmaker needed to cut staff by 10% to prepare. 

Since Tesla employs nearly 100,000 workers, that could mean up to 10,000 jobs lost around the world, but digging deeper into the Reuters report reveals that Musk did not necessarily mean jobs throughout the entire company when he spoke of cuts.

More specifically, the report says that 10% of salaried staff would be cut because Tesla had “become overstaffed in many areas.” The hourly headcount would increase, however, Reuters said.

“Note, this does not apply to anyone actually building cars, battery packs or installing solar,” Musk wrote in the email seen by Reuters.

“Uniquely formed insight”

Even so, Tesla stock dropped 9% in U.S. trading on Friday after the Reuters report came out, and the NASDAQ dropped 2% overall on the news.

It was not immediately clear whether Musk was referring to the global economy or just the U.S. economy when he made the proclamation, but analysts seemed to take it pretty seriously.

“Elon Musk has a uniquely informed insight into the global economy. We believe that a message from him would carry high credibility,” Adam Jonas, an analyst Morgan Stanley, said in a report.

“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,” Hanover-based NordLB analyst Frank Schwope said.

Tesla had a record-breaking year for car production in 2021 even though some of its operations in China were shut down for two months because of COVID-19.

“Hurricane . . . coming our way”

JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron have also been bearish on the economy in recent days.

A “hurricane is right out there down the road coming our way,” Dimon said this week.

Musk continues to go through the process of acquiring Twitter, a deal that was cleared by regulators this week. Twitter stock jumped 2% at the news.

Latest News