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Elon Musk Decides to Cut 10% of Tesla's Workforce

When the email messages from Elon Musk about remote work leaked, some analysts saw that as a veiled attempt to cut jobs at Tesla. Reuters discovered that this is not so veiled anymore: it read an email message from Musk in which he ordered Tesla to stop hiring new people. The reason is a “super bad” feeling about the economy.
Elon Musk said in an email seen by Reuters he wants to fire 10% of Tesla's workforce 16 photos
Photo: Tesla
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Besides not hiring anyone else, Musk also wants to cut Tesla’s workforce by 10%. According to Reuters, the company employed 100,000 people by the end of 2021. That seemed to mean that the Tesla CEO planned to fire 10,000 workers, which is quite weird given everything Tesla did recently and also what the company states about sales.

To start with, Tesla opened two new factories very recently: one in Grünheide, Germany, and one in Austin, Texas. Putting them in full operation will demand hiring a lot more people, something that Tesla was having trouble with, especially in Germany. The company pays lower wages than its competitors. Tesla disputes that by stating it offers stock options that make its rates attractive. Many employees complain that they are fired before being entitled to receive these share bonuses.

Another issue relates to the alleged demand Tesla has. The company often states that it will only be able to deliver some vehicles months from now. Some derivatives – the ones already in production, mind you – will only be delivered by 2023 if they are ordered right now. That wait would be shorter for vehicles ordered with FSD, a $12,000 beta driving aid that Tesla decides if you can use or not. If demand is as high as the EV maker says it is, it would need to hire more people, not fire those who already work for it.

The way Reuters first learned the story, either Tesla did not have so much demand and needed to cut its production capacity, or it just wanted to restrict the offer and raise prices, which did not make sense with two new factories ready to expand the number of cars Tesla currently sells.

At least one person agreed to talk to Reuters about the remote work email from Musk as a strategy to reduce Tesla’s workforce: Jason Stomel, founder of tech talent agency Cadre. According to him, this has the potential to be a disguised layoff with another benefit for Tesla: avoiding severances. In an update, Reuters reported another email in which Musk mentioned only salaried workers would be fired and that hourly headcount would increase.

Despite that, it seems that the EV maker is more concerned about saving money than it says it is. We should never forget that Musk joked about Tesla’s bankruptcy risk on an April Fool’s Day when that was a genuine concern. We’ll only know about that if the Tesla CEO decides to admit that on Twitter or if the company runs into trouble. At least Musk tried to clar things: firing 10% of your employees when demand is peaking was not a good sign.

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Editor's note: The gallery contains images of Giga Austin and Giga Grünheide. The article was updated after Reuters learned about another email in which Musk corrected the information: his plan was to fire only salaried workers, the same ones he wants not to work remotely anymore.

About the author: Gustavo Henrique Ruffo
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Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
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