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I feel for Elon. Being a CEO sucks. You have to deal with all sorts of areas that you have no interest in. Tons of headaches. But as both he and Steve Jobs learned, you can’t have your cake and eat it too. You can’t delegate upwards, the person in charge will screw things up.
 
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As of yet the "bad feeling" email has not surfaced. This is the only email that has actually been posted:

To: Everybody
Subject: Headcount Reduction
Date: Friday, June 3, 2022

Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas. Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.

Elon


---
 
As of yet the "bad feeling" email has not surfaced. This is the only email that has actually been posted:

To: Everybody
Subject: Headcount Reduction
Date: Friday, June 3, 2022

Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas. Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.

Elon


---
It's possible that the leaker is worried that unique versions of the email were sent out.
 
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Makes sense to me. Cutting the workforce by 10% based on a "bad feeling" that the economy is going to tank soon, will make investors very nervous and worried. So I am not surprised the stock tanked today.

He seems convinced that the economy is going to tank soon. Things are somewhat chaotic right now, but I see a lot of things coming down the pike that will boost the economy. First quite a few European countries have had mandates to switch to electric vehicles this decade and the war in Ukraine has just accelerated those plans. The US is not as aggressive as Europe, but there is a push on here too.

The US is re-industrializing. The shortages from the pandemic made a lot of people sit up and take notice that China is not going to be a completely reliable source. China's continued disruptions due to their zero tolerance policy towards COVID has kept up the pressure to find alternative sources. China will also see a labor shortage in about 10 years and that will push them out of the market for cheaper manufacturing. The US is building automated factories to make a lot of things made in China now. That's going to require a lot of technicians to keep those factories running.

Elon is looking at what the threat of rising interest rates has done to funding for tech start ups. A lot of capital was pulled back because borrowing money is getting more expensive. It has hurt emerging tech stocks and start ups in general, but I think this is going to be short term.

Short term the markets always react emotionally to whatever is going on. Rumors about interest rates going up will tank the market as people scramble to save themselves from the crash they are creating by panicking. But then the market adjusts to the new conditions and things return to normal. With interest rates going up, there probably is some real selling being done by people who are over extended and selling assets to pay off loans that are getting more expensive, but it's amplified by the Chicken Littles.

Once investors get used to borrowing rates being a little bit higher (but still quite low compared to history), the markets will start going up again and money will start flowing into start ups again.

If Elon really was so concerned about start ups being starved, he could have taken the billions he's throwing at Twitter and start a venture capital firm instead.
 
The US is re-industrializing. The shortages from the pandemic made a lot of people sit up and take notice that China is not going to be a completely reliable source. China's continued disruptions due to their zero tolerance policy towards COVID has kept up the pressure to find alternative sources. China will also see a labor shortage in about 10 years and that will push them out of the market for cheaper manufacturing. The US is building automated factories to make a lot of things made in China now. That's going to require a lot of technicians to keep those factories running.

Correct, but Tesla is a worldwide company. If Europe and China take spills, Tesla's revenue will suffer.

When oil prices get this high, a recession is almost a given. Rising interest rates as well as rising housing prices are also recessionary (the combo of rising housing prices and mortgage rates has caused the monthly mortgage payment for buying a new median price home to increase 79% in the past year). Anecdotal evidence is showing that the job market is not tight anymore (this won't show up in official data for a few months).

At any rate, Elon is doing what any good CEO should be doing right now which is belt tightening. Tesla will continue to hire for manufacturing expansion.
 
Additional details from Electrek. He's doing the prudent thing as CEO to prepare for a possible recession.


 
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Biden does not appear to agree with Elon's view on the economy.


"The president also made a dismissive quip to the world’s richest man, seeming to mock Musk's business endeavors in space exploration.
"So, you know, lots of luck on his trip to the Moon. I mean, I don’t — I mean, you know..." Biden concluded on the subject, trailing off.

Musk responded to Biden’s cheeky send-off on Twitter, by sharing a NASA article reporting that Musk’s SpaceX company will be providing the rocket systems that the U.S. government's space program will use to get men to the moon on its upcoming Artemis program."
 
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Salaried... I'm guessing engineers fall under that category. They're laying off 10% of engineers?

Not so sure if that's wise for a technology based car company to do but maybe they have more than enough engineers.

Engineers fall under that category, but so do many other jobs. I can't think of any area where they would be over staffed, but say they could be laying off account managers in the solar business or something like that. Maybe they're going to scale back making solar panels or something? We'll probably know in the next few weeks.
 

WTF?

"I have a bad feeling about the economy. That's why I'm spending $44bn to acquire a struggling social media company with employees who loathe me and whose business model is wholly dependent on economically-sensitive advertisements. And I'm doing this levered potentially, with personal guarantees."

Make it make sense.
 
What Musk is really saying is that he expects his sales forecast to be far worse than predicted. Could be buyers. Could be parts. No reason to cut staff otherwise. Tesla is currently making a boatload of profit.
Neither of these seem to be reasonable concerns.

Evs are hot. Tesla is the market leader. They have competition but that's always the case. If anything they should be hiring more.
 
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