June 6, 2022: -Tesla CEO Elon Musk has a “super bad feeling” regarding the economy and needs to cut 10% of jobs at the electric carmaker, he said in an email to executives viewed by Reuters.
On Thursday, the message, sent and titled “pause all hiring worldwide,” came two days after the billionaire exposed staff to return to the workplace or leave and adds to an increasing chorus of warnings from business leaders regarding the risks of a recession.
According to its annual SEC filing, Tesla employed almost 100,000 people at the company and its subsidiaries at the end of 2021.
On Friday, Tesla shares decreased nearly 3% in U.S. premarket trade, and its Frankfurt-listed stock was down 3.6% after the Reuters report. U.S. Nasdaq futures shifted negative and were trading 0.6% lower.
Musk has warned in the latest weeks regarding the risk of a recession, but his hiring freeze and staff cuts lived the direct and high-profile message from the head of an automaker.
So far, demand for Tesla cars and different electric vehicles has remained strong. Many of the standard arrows of a downturn, including increasing dealer inventories and incentives in the United States, have not materialized.
But Tesla is working to restart production at its Shanghai factory after Covid-19 lockdowns forced costly outages at the plant.
“Many people share Musk’s bad feeling,” said Carsten Brzeski, global head of macroeconomic analysis at Dutch bank ING. “But we are not talking about a global recession. We are predicting a cooling of the global economy towards the year-end. The U.S. will cool off, while China and Europe will not rebound.”
Musk’s gloomy outlook reflects the recent comments from executives, including JPMorgan Chase CEO Jamie Dimon and Goldman Sachs President John Waldron.
This week, Dimon said a “hurricane is right off there down the road coming our way,” Dimon said.
Inflation in the U.S. is approaching a 40-year high and has caused an increase in the cost of living for Americans. Correspondingly, the Federal Reserve faces the challenging task of dampening demand enough to curb inflation while not generating a recession.