June 25, 2022

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Tesla cuts 10% of employees, Musk tells employees

Tesla cuts 10% of employees, Musk tells employees

Tesla CEO Elon Musk plans to cut 10 percent of the electric car maker’s paid workforce, he told employees in an email Friday.

The job cuts will not apply to employees who make cars or batteries or who install solar panels, and the number of employees will increase by the hour, Musk said in the email, a copy of which was reviewed by the New York Times. “Tesla will cut the number of salaried employees by 10 percent, as we have too many workers in many areas,” he said.

Reuters news agency reported earlier, citing a different email that Mr. Musk sent only to Tesla executives. The automaker’s stock price closed Friday down about 9 percent after that article was published.

Tesla’s employees grew exponentially as sales rose and built new plants, including two that opened this year near Berlin and Austin, Texas. The company employed more than 99,000 workers at the end of last year. Just two years ago, Tesla had 48000.

Mr. Musk and Tesla did not respond to requests for comment.

Earlier this week, Mr. Musk told employees at the rocket company, Tesla and SpaceX, that they are expected to spend at least 40 hours a week in their offices.

“The older you are, the more visible your presence is,” Musk said in an email to SpaceX employees on Tuesday. “This is why I spent so much time in the factory – so those on the line could see me working alongside them. If I didn’t, SpaceX would have gone bankrupt a long time ago.”

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The announcement prompted Mr. Musk and his companies to have a heated debate about the right approach to restoring normalcy after two chaotic years of the pandemic. He also called for concern that he might shy away from top performers who would prefer to continue working remotely for some or all of the time.

New layoffs won’t be Tesla’s first. The automaker also laid off some workers at 2017 And the 2018.

In recent weeks, investors He started interrogating The increase in the company’s share price. The market values ​​the company at more than $728 billion, more than many other large automakers combined. Tesla shares are down about 40 percent from their highs at the end of last year, drawing attention to the company’s risks from increased competition, accusations of racial discrimination and production problems at its Shanghai plant.

Some critics see Mr. Musk’s bid to buy Twitter as another distraction that could hurt Tesla. One big concern for some investors is that the automaker’s board lacks sufficient independence from the CEO to serve as a check on him and his motives.

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“From a corporate governance perspective, Tesla has a lot of red flags,” said Andrew Boreda, senior analyst specializing in socially responsible investing at Sage Advisory Services, an Austin investment firm, He told The Times last month. “There are almost no checks and balances.”

Mr. Musk’s management style and success – he was listed as the world’s richest man by Bloomberg and Forbes – earned him admiration but also made him a lightning rod. Tesla has lost a number of CEOs in recent years, and many of them have taken senior jobs at other automakers, technology companies and battery makers.

Recently, Mr. Musk praised the work ethic in China, where working conditions can be harsh or even abusive, suggesting that workers in the United States were lazy. They won’t just burn midnight oil. They’ll burn oil at three in the morning,” He said about Chinese workers in an interview with the Financial Times. “So they are not even going to leave the factory type. Whereas in America, people try to avoid going to work at all.”

However, some analysts remain optimistic about Tesla’s prospects. “In our view, it is likely that Tesla will not need to hire more employees to sustain its growth, and we believe the workforce reduction plan shows most likely that Tesla hired last year,” Seth Goldstein, Senior Equity Analyst at Morningstar, said in a note Friday.