Tesla Chief Executive Officer Elon Musk asserted the electric automaker must reduce personnel by approximately 10%, citing a "super bad feeling" about the economy, according to an internal email seen by Reuters.
The report indicated that the email, with the subject "pause all hiring worldwide," was sent to company executives on Thursday, per Business Standard.
Bloomberg reported that at 8:02 a.m., Tesla stock was down 4.8 percent. The larger US market was weighed down in the early New York trade. The car manufacturer has not responded immediately to requests for comments on Friday.
The news comes at a difficult time for Musk and the electric vehicle company he founded. Tesla's stock has dropped 22% after Elon Musk announced a surprise plan to buy Twitter Inc., which looks to have stagnated.
Concerns about the global economy, as well as the impact of China's Covid-19 lockdown in Shanghai, where Tesla has manufacturing, have impacted the business, which has fared better than others in the face of global supply shortages for components like processors.
Musk Orders Staff To Go Back To Work
Earlier this week, Elon Musk ordered Tesla staff to return to work or leave the company.
In a separate email sent to employees on Tuesday, he said, "Everyone at Tesla is required to spend a minimum of 40 hours in the office per week. We assume you have resigned if you don't show up."
Musk has cautioned about the possibility of a recession in recent weeks, but his email ordering a hiring halt and staff reductions was the most direct and high-profile statement of its sort from an automaker's CEO.
So far, demand for Tesla cars and other electric vehicles has remained high, and many of the conventional signs of a slowdown, such as rising dealer inventories and incentives in the United States, have not been fully realized.
However, after Covid-19 lockdowns forced costly plant disruptions, Tesla has struggled to restart production at its Shanghai facility, per a report from NBC News.
Musk Echoes the Concern of Other Business Leaders
According to Carsten Brzeski, global head of macroeconomic research at Dutch bank ING, the "bad feeling" of the world's richest man is "shared by many people."
"But we are not talking about a global recession. We expect a cooling of the global economy towards the end of the year. The US will cool off, while China and Europe are not going to rebound," the expert explained.
Elon Musk's negative outlook echoes the concerns of many executives like JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.
A "hurricane is right out there down the road coming our way," Dimon remarked recently.
Inflation in the United States is near 40-year highs, resulting in a hike in the cost of living for Americans. At the same time, the Federal Reserve faces the great challenge of damping demand enough to prevent a recession.
Several analysts have lately lowered their price forecasts for Tesla, citing slower deliveries and decreased output at the company's Shanghai facility, which serves as a hub for providing electric vehicles to China and export.
According to business filings and data on sales in China, China accounted for slightly over a third of Tesla's global deliveries in 2021.
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