Tesla cuts job openings since Elon Musk's economic warning
Tesla's actions are a concerning sign of the health of the global economy as markets contract, inflation soars and recession worries run rampant.
The number of job listings on Tesla's website has dropped to 5,011 from 5,855 at the start of the month, according to data provided to Reuters by Thinknum Alternative Data. Listings are down 32% from a recent high on May 21.
In addition, about 20 people identifying themselves as Tesla employees said they were laid off, let go or had positions terminated in the past week in online postings and interviews with Reuters. That is a tiny number compared to the size of Tesla's workforce, but several described being part of a 10% job reduction, signaling that the company is indeed laying off workers.
Other Tesla workers cited a sense of uncertainty over how job cuts would be implemented and said Musk’s order earlier this month that they return to the office and stop working remotely had made their positions untenable.
Tesla did not respond to Reuters' request for comment.
The full scope of the job reductions and to what extent those cuts have been offset by additional hiring was not immediately clear, and Tesla remains a sought-after employer with a climate-focused mission and a record of innovation that has fueled rocketing vehicle sales.
Tesla, which had about 100,000 employees globally at the end of last year, also canceled three online recruitment events for China that had been scheduled this month.
Tesla has continued to hire in some areas, including Germany, where Tesla is ramping up production on a delayed electric vehicle factory near Berlin. The regional economy minister for Brandenburg, the state where the plant is located, said earlier this week that Tesla was hiring 500 to 600 new workers per month and had recruited about 4,500 people so far.
'SUPER BAD' START TO MUSK MESSAGES
Musk told Tesla executives in an email on June 2 seen by Reuters he had a "super bad feeling" about the economy and that the company needed to cut staff by about 10% and "pause all hiring worldwide."
He followed up the next day with a note to all employees saying 10% job cuts would apply to salaried workers, not hourly workers. And on June 4 he tweeted that over the next 12 months salaried worker headcount would remain the same and total headcount at Tesla would likely increase. Musk’s warning about the economy was read by analysts as a warning for the broader auto sector, which has seen strong demand relative to production despite two years of global pandemic and increasing concern of the risk of recession.
Tesla has achieved record deliveries and earnings despite supply chain constraints, but a lockdown in Shanghai cut production. Its share price also has dropped 40% this year, partly because of concerns by Tesla investors about Musk's offer to buy Twitter. Others found evidence that Tesla had pulled back on job postings in recent weeks. Hedge fund Snow Bull Capital calculated a 24% drop in Tesla job postings globally in the first week of June, and a 12% decrease in the second week of June.
Julian Cantu, who had been working for Tesla for over a year in Austin, Texas, said that he was told that his job had been eliminated. "I didn't necessarily think it would happen to me," said Cantu, who was paid on an hourly basis.
Cantu told Reuters that several other members of his team had also had their jobs eliminated. Some of them had moved to Texas to work for Tesla, he said.
Others who have left Tesla include the company’s country manager in Singapore, the company’s senior representative in India, a market it has suspended plans to enter, and a senior manager at Tesla's Texas factory.
Two days before his job warning, Musk said in a company email that he would fire workers who did not return to the office, saying making the most exciting products "will not happen by phoning it in".
Tesla, headquartered in Texas, also has U.S. offices in Fremont and Palo Alto, California.
Musk’s abrupt order to workers to return to working from the office blindsided some, two Tesla workers told Reuters.
One of them, a Tesla employee who had been hired to work remotely, told Reuters that the mixed messages were impinging on work.
"Many of the conference calls I've gone on, people will say, 'Have you heard anything? Do you know anyone who's gotten laid off?' You spend five to 10 minutes at the beginning of every call trying to get information," the person said.
(Reporting by Hyunjoo Jin and Victoria Waldersee; Additional reporting by Ju-min Park; Editing by Peter Henderson, Kevin Krolicki and Lisa Shumaker)
Elon Musk Is Furious
Elon Musk is angry.
His detractors will see a lack of fair play, while his fans will give him reason.
Before getting to the reason for his anger, it should be noted that for more than a decade, from 2003 to almost 2013, the billionaire and Tesla (TSLA) - Get Tesla Inc. Report pushed hard for the adoption of electric vehicles despite mockery from rivals and skepticism from financial markets and consumers.
Musk and Tesla had, however, found an ear at the White House in the person of Barack Obama, newly elected in 2008. Obama set an ambitious goal of putting 1 million advanced technology vehicles on the road by 2015 - which would reduce dependence on foreign oil and lead to a reduction in oil consumption of about 750 million barrels through 2030.
Obama proposed to transform the existing $7,500 federal tax credit for electric vehicles into a rebate that will be available to all consumers immediately at the point of sale. Tesla, which was one of the few vehicle manufacturers to develop only vehicles, took full advantage of this aid.
But that tax credit was to start disappearing once the automaker had sold its 200,000th qualifying. The credit was first to be reduced to $3,750, then to half again, and finally the aid was to disappear over a period of time.
Tesla sold its 200,000th vehicle in 2018, and the credit fully expired at the end of 2019.
It's a 'Big Deal'
But for many of the Austin, TX-based company's competitors, the tax credit still applies in full. This is the case, for example, of the Ford Mustang Mach-E (F) - Get Ford Motor Company Report model, the F-150 Lightning pickup/truck, the electric version of the best-selling F-150, the Lucid Air sedan from Lucid Group (LCID) - Get Lucid Group Inc. Report, the Mercedes-Benz EV EQS (DDAIF) , the Porsche Taycan (VLKAF) , R1T pickups and R1S SUVs from Rivian (RIVN) - Get Rivian Automotive Inc. Report and the Volkswagen ID.4.
You can find the list of brands and vehicles that still benefit from this tax credit here.
This credit gives a competitive edge to all these brands as the battle intensifies in the electric vehicle market between automakers, says Musk. And conversely, this substantial aid disadvantages Tesla, says its CEO.
"Tesla is at a competitive disadvantage with respect to tax credits," Musk said during a recent interview with the Tesla fan club Tesla owners Silicon Valley. "That is quite significant when you're talking about like, say a $40,000 car and a $7,500 tax credit. That's like almost a 20% difference. So big deal.
The serial entrepreneur did not stop there.
"So Tesla is successful currently in spite of our competitors having materially greater tax advantages, in spite of it not because of it."
"If you eliminated all EV tax credits, Tesla's position will improve immediately."
To show that he was angry at this federal tax credit that he considers unfair, Musk renewed his criticisms on the social network Twitter.
"Buyers of competing electric cars receive a $7500 tax credit, but Tesla does not," the billionaire repeated, thereby making his company a victim.
Tesla Is Not Alone
The video, posted on June 15, has already been viewed more than 2.3 million times.
"Truly absurd that government would actually subsidize cars that are not even being manufactured in the US with $7500 tax credit & wouldn't support Tesla (which completely manufacturers in the US)," commented a Musk fan. "Government supports Ford, whereas Ford is producing few of their cars in Mexico."
"Yeah, it’s crazy," Musk replied. "Model 3 has the most US content of any car made today."
What Musk fails to say is that Tesla isn't the only major automaker no longer benefiting from this federal tax credit. General Motors (GM) - Get General Motors Company Report is also in the same situation. Electric vehicle buyers interested in the Chevy Bolt and Chevy Bolt EUV will receive nothing.
In general, vehicles benefiting from this federal tax credit must be battery-electric or plug-in hybrids and purchased-- not leased -- as new vehicles.
It is based on battery capacity beyond a standardized minimum, so some plug-in vehicles qualify for lesser amounts.
Aside from the federal tax credit, there are other state-level incentives for electric vehicle buyers. You can consult the list of states offering aid here.
Elon Musk tells Twitter employees
he wants to be involved in product
Amanda Silberling
Thu, June 16, 2022
In a company-wide Twitter call today, presumptive buyer Elon Musk answered questions from "tweeps" for the first time.
Will the Tesla and SpaceX CEO's $44 billion offer to buy Twitter actually go through? Your guess is as good as mine -- but the market downturn means that his offer is a bit more steep than it was initially, causing him to drag his feet and dwell on the problem of bots. And if the deal goes through, what will his role be? Who knows. But Musk's Q&A with Twitter employees at least shed a bit of light as to where his head is.
According to a New York Times liveblog of the 45-minute call, Musk said he isn't quite sure what his title at the company will be. But he particularly wants to be involved in product and expects the team to listen to his input on new features. He also added that he's very involved at Tesla, and he would adopt a similar leadership style at Twitter.
As layoffs sweep the tech industry, some Twitter employees asked how Musk's potential acquisition might affect their jobs (questions were relayed through Leslie Berland, Twitter's chief marketing officer).
Again, Musk was vague in his response.
"Right now, costs exceed revenue. That’s not a great situation," he said regarding potential layoffs. Musk has also warned employees about job cuts at Tesla, where he plans to reduce headcount by 10%.
Right now, about a quarter of Twitter's employees work from home. But earlier this month, Musk sent Tesla employees an email with the subject line "To be super clear," stating that all employees need to spend a minimum of 40 hours in the office each week.
"Moreover, the office must be where your actual colleagues are located, not some remote pseudo office," he wrote.
Musk told Twitter employees that it is "much better if you are on location physically," but that exceptional employees might be able to work remotely. This is because the business of running a social media platform is far different from building cars or rockets, which Musk believes is "impossible to do remotely."
"The more senior you are, the more visible must be your presence," he wrote in his message to Tesla employees. He claimed that Tesla would have gone bankrupt had he not spent time in the factories, where "those on the line could see [him] working alongside them."
As expected, Musk wants to make Twitter a private company once the deal closes, saying that the platform can be more productive without having to appease activist shareholders.
Yet the acquisition itself is still up in the air -- Musk has claimed that the deal is "on hold" until Twitter can prove that its claims about the number of bots on the platform are legitimate, and Twitter hands over its "firehose" of data. So if he does want to get out of the deal, it won't be easy.
"Twitter has and will continue to cooperatively share information with Mr. Musk to consummate the transaction in accordance with the terms of the merger agreement," Twitter said in a statement to TechCrunch last week. "We intend to close the transaction and enforce the merger agreement at the agreed price and terms."
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