Elon Musk has a “super bad feeling” about the economy and he wants to cut about 10% of jobs at the electric carmaker, Tesla.
He revealed this in an email titled “pause all hiring worldwide” to his executives just two days after the world’s richest man told employees to return to the workplace; or leave the company.
Read Also: Elon Musk Issues Stark Ultimatum To Remote Tesla Workers
Almost 100,000 people were employed at Tesla and its subsidiaries at the end of 2021, its annual SEC filing showed.
Musk’s stark warning of a potential recession and the knock-on effect for automakers is the most direct and high-profile forecast of its kind in the industry.
Concerns about the risk of a recession have grown; and demand for Tesla cars and other electric vehicles has remained strong. Many of the traditional indicators of a downturn – including increasing dealer inventories in the United States – have not materialized.
But Tesla has struggled to restart production at its Shanghai factory since COVID-19 lockdowns forced costly outages at the plant.
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. It 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.
Read Also: Elon Musk Says Twitter Takeover Deal ‘Temporarily On Hold’
‘PAUSE ALL HIRING’
Before Musk’s warning, Tesla had about 5,000 job postings on LinkedIn from sales in Tokyo and engineers in its new Berlin gigafactory to deep learning scientists in Palo Alto.
Musk’s demand that staff return to the office has already faced pushback in Germany.
Meanwhile, Musk in his Tuesday email wrote;
Everyone at Tesla is required to spend a minimum of 40 hours in the office per week. If you don’t show up, we will assume you have resigned.
Musk also engaged on Thursday in a Twitter spat with Australia tech billionaire and Atlassian Plc co-founder Scott Farquhar, who ridiculed the directive in a series of tweets as being “like something out of the 1950s“.
He tweeted: “recessions serve a vital economic cleansing function.” He said this in response to a tweet by Farquhar who encouraged Tesla employees to look into its remote work positions.
In late May, when asked by a Twitter user whether the economy was approaching a recession, Musk said;
Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.
Meanwhile, Jason Stomel, founder of tech talent agency Cadre said;
I think there’s potential that this is just a disguised layoff. Meaning they’re able to get rid of people with attrition, or without having to actually have a layoff.
“(Musk) knows there’s a percentage of workers who are just not going to come back,” which he said would be cheaper because no severance would be needed.
