This is not good news.
Elon Musk has reportedly asked Tesla executives to “pause all hiring worldwide” and cut about 10% of the staff due to what he called a “bad feeling about the economy.”
Earlier this week, we reported on Elon Musk asking all Tesla employees to come back to the office or quit.
Many people suspected that this was a wave of layoffs in disguise since Musk had to know a certain percentage of remote workers wouldn’t want to come back to the office.
Now he apparently confirmed it in an email to Tesla executives obtained by Reuters:
Tesla CEO Elon Musk has a “super bad feeling” about the economy and wants to cut about 10% of jobs at the electric carmaker, he said in an email to executives seen by Reuters.
This would be a significant move for Tesla, a company with more than 100,000 employees, which would mean letting go of about 10,000 of them.
The email was also reportedly titled “pause all hiring worldwide.” Tesla pausing hiring would slow down its growth as the company had about 5,000 open positions around the world at the time Musk sent the email.
The CEO had recently made comments about how he believes the US is going to be in a recession for the next 18 months. Musk also said that he believes that “it is a good thing” and that “some bankruptcies need to happen.”
Tesla itself is expected to have a tough second quarter due to the Gigafactory Shanghai month-long shutdown. The automaker is expected to break its streak of record quarters for deliveries.
When Musk sent the email asking employees to come back to work, we suspected that there was a ulterior motive.
Several Tesla employees reached out to point out that Tesla grew significantly during the pandemic when many employees worked remotely. The company didn’t invest in the office and parking spaces to accommodate those new employees.
Therefore, Musk not only knew that some employees would quit based on the requirement to come back to the office for “at least 40 hours per week,” but he also knew that it would be impossible for all of them to even come to work.
That said, Tesla is growing so fast that there are always some inefficiencies in mass hiring that slip through the cracks. A round of layoffs is not uncommon after a long phase of mass hiring.
On the other side, Tesla pausing hiring worldwide is a more critical move and would point to other concerns. Like Musk reportedly wrote in the email, he is apparently worried about the economy and appears to want Tesla to be leaner in order to withstand a bigger economic downturn if it comes.
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