In early June, Tesla CEO Elon Musk said in an email to all employees at the electric vehicle maker that the company would cut 10% of its salaried workers and instead rely on more hourly workers. Reports noted that shares of Tesla dipped 9% mid-morning after Musk sent out an email to his executives about his plans to cut the company’s workforce and expressed a “super bad feeling” about the economy.
He added that the memo did not apply to anyone “building cars, battery packs or installing solar.” The new joiners included a materials handler, fire alarm technician, and product specialists. Another signaled his promotion to lead materials handler.
The company laid off an estimated 200 workers in its Autopilot division and closed an entire office in San Mateo, California. The reductions came as Musk waded into the debate over work-from-home, a polarizing issue for employees and companies alike as they navigate the return to normality as the pandemic recedes. Earlier this month, the Tesla chieftain issued an ultimatum for staff at the company to return to the office or leave.
Biden said that while Musk is talking about economic fears and reductions, Ford is increasing its investment in building new electric vehicles, with 6,000 new union employees in the Midwest. The president also lauded the former Chrysler Corp., Stellantis, for making similar investments in electric vehicle production in the U.S. and Intel for adding 20,000 new jobs in computer chip manufacturing.
‘It’s growing after all’
Tesla stock finished 9.2% lower at $703.55, while the S&P 500 and Dow Jones Industrial Average fell 1.6% and 1.1%, respectively. Tesla stock declined partly because the electric-vehicle maker is supposed to increase production, and it takes people to build and design more cars. Musk’s tweet on Saturday said that the “total headcount will increase, but salaried should be fairly flat.”
However, Musk did not clarify whether or not existing salaried employees would become hourly employees or if new employees would be hired at Tesla. The period the statement referred to is over the coming 12 months. More are likely to be laid off after Musk said at the Qatar Economic Forum last month that the cuts would take effect over the next three months.
Tesla’s headcount increased by roughly 40% in 2021 as unit sales increased by more than 85%. Investors expect unit sales at Tesla will grow another 50% in 2022 to about 1.4 million units. Tesla’s headcount at the end of 2021 was about 100,000 people. This year, the company has already opened two new factories, thus ramping up production. One of these manufacturing facilities is located in Texas, and the other is near Berlin.
According to professional analysts, Musk’s comments suggest that Tesla plans to limit cost growth and not reduce its OPEX. This, in turn, should result in some savings for the electric vehicle maker.