Tesla will cut 10% of salaried staff, Musk tells employees

Tesla CEO Elon Musk plans to cut 10 percent of the electric carmaker’s salaried workforce, he told staff in an email Friday.

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

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

Tesla’s workforce grew substantially as sales increased and it built new factories, 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 earlier, Tesla had 48,000.

Musk and Tesla did not respond to requests for comment.

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

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

That announcement thrust Musk and his companies into a hotly contested debate over the right approach to restoring normalcy after two chaotic years of the pandemic. It also raised concerns that it could drive away top performers who would prefer to continue working remotely part or all of the time.

The new layoffs will not be the first at Tesla. The automaker also laid off some workers in 2017 and 2018.

In recent weeks, investors have begun to question the company’s soaring share price. The market values ​​the company at more than $728 billion, more than several other major automakers combined. Shares of Tesla are down 40 percent from their peak late last year, drawing attention to the risks the company faces from growing competition, accusations of racial discrimination and production problems at its factory. in Shanghai.

Some critics see Musk’s offer to buy Twitter as another distraction that could hurt Tesla. A big concern for some investors is that the automaker’s board lacks enough independence from the chief executive to check on him and his impulses.

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

Musk’s management style and success (Bloomberg and Forbes rank him the world’s richest man) have won him admirers, but made him a lightning rod. Tesla has lost several top executives in recent years, many of whom have held top positions at other automakers, technology companies and battery manufacturers.

Musk recently 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 be burning the midnight oil. They will be burning off the 3am oil,” he said of the Chinese workers in an interview with The Financial Times. “So they won’t even leave the factory type of stuff. Whereas in America, people are trying to avoid going to work.”

Still, some analysts remain optimistic about Tesla’s prospects. “In our view, Tesla likely won’t need to hire more employees to sustain its growth, and we think the plan to cut the workforce will likely show that Tesla overhired last year,” Seth Goldstein, senior equity analyst. from Morningstar, it said in a note on Friday.

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