Elon Musk may not fire 10% of Tesla’s staff after all. Instead, the Tesla chief on Sunday said that the total headcount at the electric automaker would increase. However, the number of salaried (i.e., not on an hourly basis) workers will remain consistent. Change of heart or yet another strategy?
Citing headwinds posed by a looming economic recession, Tesla CEO Elon Musk sent a letter last week to his executives to freeze all hiring. Musk also expressed they may need to cut Tesla’s 1,10,000 strong workforce by 10%.
The market reacted negatively to the news and triggered a selloff that lowered Tesla’s share price by 9.21%. The announcement came just two days after Musk commanded all employees to carry out in-office work for at least 40 hours per week.
However, the Tesla boss on Sunday decided to take executives, investors, employees and other stakeholders on yet another spin when he said the headcount would actually increase. In his reply to Whole Mars Catalog, he clarified that even though headcount will grow, there may not be any changes in the number of salaried employees.
Total headcount will increase, but salaried should be fairly flat
— Elon Musk (@elonmusk) June 4, 2022Opens a new window
Musk is possibly talking about beefing up Tesla’s gigafactories in Texas and Germany, where workers will be paid by the hour. Tesla had 69,000 workers under its payroll at the end of 2020, making the surge to 100,000 in 2021 quite remarkable.
This contributed to Tesla’s surge in Q2 2022 and preceding quarters, wherein the company achieved its goal of 50% growth and expected the same rate to hold in the short term. However, supply-side issues and a 20% to 30% higher demand for essential parts had the potential to play spoilsport in Tesla’s growth.
In April, Musk said during an earnings call that production numbers would remain unaffected and that the rise in costs would have to be borne by the consumers. Yet, the demand for Tesla’s electric vehicles has remained high, a positive sign amid what Musk considers an imminent recession.
Therefore, it is possible that workers engaged in assembling cars, battery packs, etc., may not lose their jobs. However, Tesla could reduce the number of high-paying research and development roles to cut costs. In any case, a high-growth company setting a conservative path for itself in terms of company expenditure signals pessimism.
And so does Musk flip-flopping on his announcements. Musk’s antics through his Twitter account, which has almost 97 million followers, have moved markets in recent years and have earned him criticism from several quarters.
Some Twitter shareholders are even suing Musk over the chaos that ensued since he announced plans to take over the microblogging company. He is accused of market manipulation in violation of California’s corporate laws. Musk also tweeted about Twitter’s acquisition being “on hold†until the number of bots on Twitter is verified.
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