Elon Musk has a “super bad feeling” about the near economic future of his company. He decided to freeze all Tesla hiring, and could even reduce the workforce by almost 10%.
While Tesla has never recorded so many orders, and the company’s development plan seemed to be in good shape, Elon Musk suddenly sounded the alarm. Announcement effect or real awareness of the entrepreneur? It is through an internal note, republished by Reuters, that we learn of the hiring freeze and the potential layoffs. There is no doubt that after Elon Musk’s latest announcements regarding teleworking, all this will still make waves.
Looking at Tesla’s results over the past few months, one would think the company is doing well. At the inauguration of Gigafactory in Texas, there was no indication that Tesla might have to downsize. The brand seemed set to reach for the stars with its new production sites and well-filled order books.
Why this sudden hiring freeze at Tesla?
Beyond the difficulties encountered locally by Tesla factories, it is also the global economic outlook that seems to worry Elon Musk. It must be said that the current context is really not favorable to electric car manufacturers. Between shortages of semiconductors and rising raw material prices, including for lithium, the main component of batteries, all manufacturers are bearing the brunt of this new crisis. For Tesla, this is in addition to the closure of the Shanghai factory for almost a month due to the containment of the city for cases of covid, and the other factories which are struggling to increase the rate of production.
So, faced with the recession that could affect the global economy, Elon Musk seems to prefer to take the lead. He indicated during a conference in mid-May: I think we are probably in a recession and this recession is going to get worse. It will probably be difficult for, I don’t know, a year, maybe 12 to 18 months, that’s usually the time it takes for a correction to occur. »
Tesla has more than 100,000 employees and recently launched nearly 5,000 hires. This decision, as brutal as the tone of its internal notes, is surprising. At Tesla, everything is going very fast, in one direction or another. Decreases such as price increases, delays or hiring can quickly go from one extreme to another, as versatile as Elon Musk’s tweets.
Voluntary departures or layoffs?
Elon Musk would have announced in an internal email 10% reduction in the Tesla workforce. Some of these departures could be borne by employees who decide to leave on their own after the announcements of the end of teleworking. 40 hours of work minimum and above all more telework, this could push part of the 10% cut in the desired workforce towards the exit.
It will remain to be seen in what kind of services Tesla will continue to downsize. Will it concern special projects like his humanoid robot? This seems surprising given the recent announcements — he’s going to present it in September. Or will it affect other R&D, engineering or support services directly, in connection with the manufacturer’s electric cars?
Update from 06/03 at 5:50 p.m. : Elon Musk clarified that the layoffs would only concern certain types of employees of the firm. Employees paid by the hour are not at risk of losing their jobs and hiring is not suspended for these profiles. Hourly contracts are mainly aimed at factory positions for the manufacture of cars and batteries, certain commercial functions and for installers of solar roofs. On the other hand, employees with “salaried” contracts, which are similar to executive status in France, are targeted by this announcement. Elon Musk considers that there is overstaffing in certain sectors.