The world’s richest man and Tesla CEO, Elon Musk, has called on his company to cut around 10% of its workforce.
Writing in an email to executives on Thursday, as seen by Reuters, Musk said that he had a “super bad feeling” about the trajectory of the economy. Tesla currently employs around 100,000 people in the United States at the company and its subsidiaries, according to its most recent SEC filing.
Musk’s warning of a potential recession and the impact it will have on automakers is the most direct forecast of its kind in the automotive industry and follows months of warnings from economists about a potential recession or stagflation.
In recent weeks, Musk warned about the risks of a recession.
“I think we are probably in a recession and that recession will get worse,” said Musk at a conference in Miami last month.
“But Tesla has struggled to restart production at its Shanghai factory after COVID-19 lockdowns forced costly outages,” Reuters reported.
As the risk of an economic crisis continues to grow, demand for Tesla’s motor vehicles and other EVs has remained strong. CNN points out that declining sales of cars has traditionally been one of the main indicators of an economic downturn.
Musk’s message to Tesla executives, which was titled, “pause all hiring worldwide,” comes two days after Musk told executive staff to return to the workplace or leave.
“Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. This is less than we ask of factory workers,” Musk wrote on Tuesday, noting that the office must be a main branch of Tesla, and “not a remote branch office unrelated to the job duties.”
Prior to Musk’s new orders, Tesla had 5,000 job openings listed on LinkedIn for sales positions in Tokyo and engineers in its Berlin gigafactory. It also had listings for AI scientists in Palo Alto, California. The company also scheduled an online hiring event for Shanghai on June 9.
“Musk’s bad feeling is shared by many people,” said Carsten Brzeski, global head of macroeconomic research at Dutch bank ING in a comment to CNBC. “But we are not talking about global recession. We expect a cooling of the global economy towards the end of the year. The U.S. will cool off, while China and Europe are not going to rebound.”
The Tesla CEO’s outlook echoes remarks from JPMorgan Chase CEO Jamie Dimon and Goldman Sachs President John Waldron.
A “hurricane is right out there down the road coming our way,” Dimon said earlier this week.
The fears of a recession come as inflation in the United States hovers at a staggering 40-year high, which has caused a major increase in the cost of living. Treasury Secretary Janet Yellen admitted earlier this week that the Biden administration was “wrong” about inflation.
“I think I was wrong then about the path that inflation would take,” Yellen said to CNN’s Wolf Blitzer when asked about her comments from 2021 that inflation posed only a “small risk,” CNN reported.