In an email sent on Thursday and seen by Reuters on Friday, Tesla CEO Elon Musk revealed that he had a “super bad feeling” about the economy and needed to cut about 10% of jobs at the electric carmaker.
Pause all hiring worldwide
The message was titled “pause all hiring worldwide” and showcased a grim outlook for the near future. It also came two days after the entrepreneur told staff to return to the workplace or leave. Musk has made several warnings in recent weeks about the risks of a recession; however, as of yet, none of his worries have materialized.
Demand for Tesla cars and other electric vehicles is currently still very high, and many of the conventional indicators of an upcoming downturn have simply not begun to occur. This does not mean that Musk has not encountered obstacles that could lead him to worry.
Tesla has had a difficult time trying to restart production at its Shanghai factory after COVID-19 lockdowns forced costly outages, and SpaceX is at risk of filing for bankruptcy. However, Musk’s request to cut 10 percent of jobs may be more of a general feeling than one associated with his actual businesses.
“Musk’s bad feeling is shared by many people,” Carsten Brzeski, global head of macroeconomic research at Dutch bank ING, told Reuters. “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.”
Declines in personal worth
Musk’s decision could be further impacted by the fact that billionaires have seen substantial declines in their personal worth since the beginning of this year. Musk has seen his personal worth shrink by as much as $46 billion since the beginning of 2022, and while some of the blame lies on the Twitter buyout decision, Musk is also in the same boat as other billionaires are.
Bezos has lost $53 billion of his personal worth, while Bernard Arnault, the world’s third-richest person, has lost $44 billion this year. Could this turn of events be responsible for Musk’s “super bad feeling”?
Tesla was not immediately available for comment, and Musk did not specify what caused him to worry in his email. However, inflation in America is currently at a 40-year high making life difficult and expensive for its citizens.
Are we on the cusp of a devastating and debilitating recession, or is Musk simply being cautious? Time will tell how things play out, but one thing is for certain several Tesla employees will find themselves back in the job market.