(RoyalPatriot.com )- In an email last week, CEO Elon Musk informed Tesla executives that he would “pause all hiring worldwide” and would have to cut about 10 percent of salaried staff, explaining that he had a “super bad feeling” about the economy.
Musk made it clear that layoffs would not include the workers who build the cars or battery packs. Instead, the 10 percent cut in staffing will be among salaried positions that are “overstaffed in many areas.”
Musk’s concerns echo those of others who fear that a recession is looming. Last week, JP Morgan Chase CEO Jamie Dimon warned of a “hurricane” “coming our way.”
Last week, Musk had tweeted that he believed there was a benefit to the US economy going into recession, adding that “some bankruptcies need to happen” in the wake of the COVID “stay-at-home stuff” that has “tricked people into thinking that you don’t actually need to work hard.” Musk warned that for those companies, a “rude awakening” is coming.
He added that companies with a negative cash flow “need to die” rather than “consuming resources.”
When asked on Twitter how long he thought a recession would last, Musk suggested that if past experience holds, it would last between 12 to 18 months.
While the Tesla CEO has been warning about recession for weeks, his email to executives ordering a hiring freeze and salaried staff cuts was the clearest indication from an automaker that recession is likely.
Musk did not explain in his email what specifically was giving him that “super bad feeling.”
Wedbush Securities analyst Daniel Ives tweeted that Musk and Tesla may be trying to get out ahead of a “slower delivery ramp” to “preserve margins ahead of an economic slowdown.”
During a conference in mid-May, Musk said he believed we were already in a recession and that this recession is likely to get worse. The Tesla CEO warned that the economy was facing “tough going” that could last anywhere from a year to 18 months.