Elon Musk pulls back Tesla’s job cut plan – sort of

CNN, CNNBUSINESS

By Chris Isidore, CNN Business

Tesla may not be downsizing after all.

That’s according to a tweet from its ever-mercurial CEO Elon Musk – an apparent contradiction to two emails he sent to staff last week about planned job cuts and a hiring freeze, which drove Tesla shares down.

Last Thursday, according to a Reuters report, Elon Musk emailed staff saying the company would freeze hiring amid a move to reduced staff by 10% – explaining that he has a “super bad feeling” about the economy.

He sent a follow-up email, according to the Musk-centric site Tesmanianspecifying that the company would increase the hourly headcount but reduce “the salaried workforce by 10%, because we have become overstaffed in many areas”, adding that: this does not apply to anyone who actually builds cars, batteries or install solar energy.

Then, Saturday, Musk tweeted that “the total workforce of the company will increase, but the employees should be fairly stable”. However, a few hours later, Musk said on Twitter that the Tesmanian story was “accurate”.

It’s unclear whether Musk equates a 10% reduction in salaried workforce with “pretty stable”: as has long been the case at Tesla, he did not respond to an email request for formal comment. reported.

Reuters’ report on last week’s email sent Tesla shares down 9% on Friday, but on Monday they were up 2.8% in early trading on Musk’s pullback. Another factor affecting the title: Musk also threatened on Monday to abandons its plan to buy Twitter. Tesla shares were hurt by Musk’s interest in Twitter as some investors feared it might happen distract him from the race the electric car manufacturer, or force it to sell more Tesla shares to raise funds.

“It clearly backfired”

The first job cut email was a “mini-disaster” for Tesla shares, said Dan Ives, technology analyst for Wedbush Securities. “Any hint of economic weakness from an influential person like Musk will be heard around the world,” he said.

Probably among Musk’s main concerns are the Covid lockdowns in China, which have led to a temporary shutdown of the Tesla factory in Shanghai and one sharp drop in industry-wide auto sales in the largest automotive market in the world.

Despite these challenges, however, Tesla still enjoys more demand for its cars than it can supply, Ives said.

“Last week’s email sparked investor jitters around the request for no reason and put pressure on the stock,” he said. “You can see why Musk doesn’t wake up in a good mood before sending that email. That said, he probably should have had a coffee before sending it. It clearly backfired.

Tesla had about 100,000 employees at the end of 2021, according to company filings. There are about 5,000 Tesla job openings listed on LinkedIn, and the company is ramping up production at two recently opened factories outside of Berlin and Austin.

In addition to emails about staffing levels, Musk sent an email to salaried staff last week saying Tesla office workers must work in the office at least 40 hours a week — and if they don’t, the company will consider them quitting.

Polls show that a majority of workers would like ability to work remotely rather enter the office. The rush for vacancies has many companies offering workers greater flexibility to work from home, although Musk is clearly not one of the leaders to do so. Despite signs of a weakening economy, the labor market remains very tight, with employers posting two job offers for each unemployed person look for a job.

The-CNN-Wire
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