Bad feeling when looking at the economy.
(Photo: dpa)
Dusseldorf Tesla boss Elon Musk apparently wants to stop new hires and cut every tenth job. He announced this in an internal email quoted by the Reuters news agency on Friday. The electric car manufacturer currently employs more than 100,000 people, including several thousand in Germany.
The 50-year-old justifies the possible wave of layoffs with a “super bad feeling” for further economic development. Tesla shares lost more than six percent on Friday when the stock market opened.
The email bore the subject line “Global hiring freeze”. This would also affect the plant in Grünheide. Around 4,000 people are already working there, as the Brandenburg Ministry of Economics announced a few weeks ago. The company has not yet responded to a request.
However, Tesla wants to expand production in Grünheide significantly, so far, for example, only one-shift operation has been used. A second shift is to be introduced in these weeks. According to previous plans, Tesla wanted to employ 12,000 people in Grünheide by the end of the year.
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The hiring freeze announced by Musk has not yet had an impact on the German location. The company has still advertised 530 jobs for Grünheide. For comparison: in March 2021 there were only 350.
The Frankfurt/Oder employment agency responsible for the plant said on request that it had not yet received any notification of a hiring freeze. “We are not aware of this message,” said Jochem Freyer, head of the local employment agency. So far, around 1,000 people have been placed with Tesla.
US stock market expert Koch: “Comment by Elon Musk weighs on Wall Street”
The reasons for the possible job cuts can certainly be found in the difficult situation in the global economy. However, there are regular waves of layoffs at Tesla. Musk laid off around nine percent of employees in June 2018, and a few months later it was seven percent. Musk spoke of “difficult times ahead of us”.
Tesla hired nearly 30,000 people in 2021
Former Tesla employees speak of “purges”. Musk wants to retain the corporate culture he created of flat hierarchies, quick decisions and a strong focus on performance. The entrepreneur attaches great importance to the selection of employees; he initially interviewed each applicant personally.
“We evaluate the need for each position,” Musk said in 2018, describing the process of which jobs will be eliminated. “We evaluate the special skills and abilities of each individual employee in the company.”
As Tesla grew in size, that became impossible. The carmaker hired almost 30,000 employees last year, including for new factories in China, the USA and Germany. The 40 percent increase in one year is very large for a relatively young company like Tesla.
In 2018, too, Tesla hired a large number of employees at once, Musk spoke of an increase of 30 percent. At that time, Tesla was ramping up production of the Model 3. The vehicle was significantly cheaper compared to the luxury cars Model S or X, Tesla took the first step towards the mass market.
The Californians had actually planned to significantly expand production. The Model Y, which is also built in Grünheide, is very popular: customers have to wait up to a year for certain model variants of the mid-range crossover. Accordingly, the company is ramping up new factories in Germany and the USA. According to Musk, more than 1.5 million vehicles will be delivered this year – an increase of more than 50 percent compared to last year.
Tesla bans working from home
In 2018 and 2019, Tesla was forced to lay off employees. The company was spending about $1 billion a quarter in cash at the time. Accordingly, analysts praised the move at the time. “They can’t burn money any way they want,” said Morningstar analyst Michael Ramsey, for example.
Tesla is very different today. The company has been profitable for some time, earning more than $5 billion in the most recent quarter alone. Accordingly, investors are less euphoric – they fear that the layoffs are a harbinger of weaker sales and profits.
Musk had already increased the pressure on employees on Wednesday when he banned them from working from home. “If someone doesn’t show up, we have to assume that person has left the company,” the letter said, with no polite salutation, with the subject line “to be super clear.”
More: Elon Musk threatens to fire employees who work from home