Anticipating U.S. downturn, Elon Musk details Tesla staff cuts

Anticipating U.S. downturn, Elon Musk details Tesla staff cuts

DOHA, June 21 (Reuters) – Tesla CEO Elon Musk (TSLA.O) has said a 10% cut in salaried staff at the electric car maker will occur over three months as the richest man of the world predicted that a US recession would be more likely than not.

His remarks were his most detailed explanation of the job cut plans and his first in-person appearance since Reuters reported earlier this month that the company was to cut its workforce by around 10% and was suspending hiring in the whole world.

Speaking at the Qatar Economic Forum hosted by Bloomberg, Musk said the cuts would only apply to employees, meaning a 3.5% reduction in the total workforce, changes he said qualified as “not super important”.

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But he said he was concerned about the prospect of a recession in the United States.

“It’s not a certainty, but it seems more likely than not,” he said.

Musk’s outlook echoes comments from executives including Jamie Dimon, CEO of JPMorgan Chase & Co, and John Waldron, chairman of Goldman Sachs. A “hurricane is right out there on the road coming our way,” Dimon said earlier this month.

Whether the United States will enter a recession is a growing concern for business leaders, the Federal Reserve and the Biden administration.

US President Joe Biden reiterated on Monday that he believes a US recession is not inevitable, even as the world’s largest economy struggles to cope with soaring gasoline prices and inflation, which is at its highest level in 40 years.

Former US Treasury Secretary Lawrence Summers told NBC News on Sunday that he expects a recession.

In a June 2 email, seen by Reuters, Musk told Tesla executives he had a “super bad feeling” about the economy and that the company needed to cut its workforce by about 10% and “suspend all hiring globally”.

He said Tuesday that Tesla plans to increase the number of workers paid by the hour rather than on fixed salaries.

Elon Musk arrives at the Met Gala In America: An Anthology of Fashion at the Metropolitan Museum of Art in New York, New York, U.S., May 2, 2022. REUTERS/Andrew Kelly

He also said that he is sticking with digital currency and intends to personally support dogecoin.

The digital currency has been extremely volatile this year, but bitcoin surged after Tesla announced in February last year that it had purchased $1.5 billion of the currency and accepted it for a short time. period as a means of payment for the vehicles.

UNRESOLVED ‘VERY IMPORTANT QUESTION’ ON TWITTER DEAL

Elon Musk also spoke about his offer to buy Twitter (TWTR.N), which Forbes magazine reported earlier this month that he had agreed to buy for $44 billion.

Musk said there were unresolved issues including the debt portion of the deal and the number of spam users.

“We are still awaiting a resolution on this issue, and it is a very important issue,” he said, reiterating doubts over Twitter’s claims that fake or spam accounts made up less than 5% of its monetizable daily active users.

“And then, of course, there’s the question of whether the debt part of the cycle will come together? And then will shareholders vote in favour?”

Musk said he would like to have 80% of North America and half the world on Twitter.

“My aspiration for Twitter is to be as inclusive as possible,” he said.

The most important thing was to steer the company in the right direction, like in his private rocket company SpaceX and Tesla, he said.

“That I’m CEO is far less important than my ability to drive the product in the right direction,” he said.

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Additional reporting by Nadine Awadalla in Dubai and Hyunjoo Jin in San Francisco; Written by Saeed Azhar; edited by Jason Neely and Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

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