Adds to a growing chorus of warnings from business leaders about the risks of recession
The company was not immediately available for comment.
Tesla shares fell nearly three per cent in U.S. pre-market trade on Friday and its Frankfurt-listed stock was down 3.6 per cent after the Reuters report. U.S. Nasdaq futures turned negative and were trading 0.6 per cent lower.
Musk has warned in recent weeks about the risk of a recession, but his email ordering a hiring freeze and staff cuts was the most direct and high-profile message of its kind from the head of an automaker.
So far, demand for Tesla cars and other electric vehicles has remained strong and many of the traditional indicators of a downturn — including increasing dealer inventories and incentives in the United States — have not materialized.
But Tesla has struggled to restart production at its Shanghai factory after COVID-19 lockdowns forced costly outages at the plant.
“Musk’s bad feeling is shared by many people,” said Carsten Brzeski, global head of macroeconomic research at Dutch bank ING. “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.”
Musk’s gloomy outlook echoes recent comments from executives including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron.
(A) hurricane is right out there down the road coming our wayJAMIE DIMON
Musk, the world’s richest man according to Forbes, did not elaborate on the reasons for his “super bad feeling” about the economic outlook in the brief email seen by Reuters.
A number of analysts have cut price targets for Tesla recently, forecasting slower deliveries due to Chinese lockdowns and lost output at its Shanghai plant, a hub supplying electric vehicles to China and for export.
China accounted for just over a third of Tesla’s global deliveries in 2021, according to company disclosures and data released on sales there.
‘Pause all hiring’
Before Musk’s warning, Tesla had about 5,000 job postings on LinkedIn from sales in Tokyo and engineers at its new Berlin gigafactory to deep learning scientists in Palo Alto. It had scheduled an online hiring event for Shanghai on June 9 on its WeChat channel.
Musk’s demand that staff return to the office has already faced pushback in Germany.
“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Musk wrote in his Tuesday email. “If you don’t show up, we will assume you have resigned.”
In late May, when asked by a Twitter user whether the economy was approaching a recession, Musk said: “Yes, but this is actually a good thing. It has been raining money on fools for too long. Some bankruptcies need to happen.”