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Exclusive: Elon Musk wants to cut 10% of Tesla jobs

 SAN FRANCISCO (Reuters) - Tesla CEO Elon Musk said in emails seen by Reuters that he is "very bad" about the economy and should cut roughly 10 percent of the electric car maker's pay. .


In a letter he sent to executives on Thursday, he outlined his concerns and asked them to "suspend hiring around the world." The bleak outlook comes two days after the billionaire asked employees to return to work or leave, adding to a growing set of warnings from business leaders about recession risks.



Tesla shares fell 9 percent in U.S. trading on Friday following a Reuters report. The Nasdaq Tech Index (.IXIC) was down about 2%.


In another email to employees on Friday, Musk said Tesla will cut its payroll by 10% as it has become "bloated" in many areas. But, he said, "the number of hourly workers will grow."


“Please note, this does not apply to those who actually build cars, batteries, or install solar power,” Musk wrote in an email seen by Reuters.


The Securities and Exchange Commission's annual reporting showed that Tesla and its subsidiaries employed about 100,000 people at the end of 2021. It did not specify the number of employees and hourly workers.


“Elon Musk has a uniquely informed view of the global economy. We think his message will have a lot of credibility," Morgan Stanley analyst Adam Jonas said in the report.


Shanghai Insurance

So far, demand for Tesla and other electric vehicles has remained strong, and many of the traditional indicators of decline, including increased dealer inventory and U.S. stimulus, have yet to materialize.


But Tesla has struggled to restart production at its Shanghai plant after a shutdown due to COVID-19 led to costly downtime.


"It's always better to apply austerity measures in good times than in bad ones," said Frank Schop, an analyst at Nord LP in Hannover. "I view the comments as a warning and a precaution."


Musk's gloomy outlook reflects recent comments from executives, including Jamie Dimon, CEO of JPMorgan Chase & Co., and Goldman Sachs chairman John Waldron.


Inflation in the United States is hovering at its highest level in 40 years and causing a jump in the cost of living for Americans, while the Federal Reserve faces the difficult task of containing demand sufficiently to curb inflation without triggering a recession.


Several analysts recently lowered Tesla's price target, predicting production losses at its Shanghai plant, the hub for deliveries of electric vehicles to China and for export.


China accounted for just over a third of Tesla's global shipments in 2021, according to company disclosures and sales data. Daiwa Capital Markets estimated Thursday that Tesla had about 32,000 orders waiting to be delivered in China, compared to 600,000 vehicles for BYD (002594.SZ), its biggest electric competitor in that market.