Tesla (TSLA) told employees it was implementing a hiring freeze and confirmed another wave of layoffs would occur in the next quarter, according to a source familiar with the matter.
in June, Elon Musk has told Tesla executives to ‘suspend all hiring’ and cut 10% of staff.
The CEO gave different people different reasons for the layoffs, including that he has a “very bad feeling” about the economy.
Tesla has grown rapidly over the years, often resulting in hiring inefficiencies that eventually lead to rounds of layoffs like this.
The “hiring pause” was more concerning because Tesla has several rapidly growing programs and needs to hire thousands of people at new factories in the United States and Germany.
However, Tesla quickly reversed the hiring pause and started to increase hiring again in the second half.
Now Electric learned that Tesla is implementing a new hiring freeze and planning further layoffs, according to a reliable source familiar with the matter.
Tesla has let some employees know it is stopping hiring for the time being. In addition to the hiring freeze, Tesla also said teams are expected to lay off in the first quarter of 2023.
The extent of the hiring freeze is unclear, as Tesla still plans to expand in some manufacturing locations. No further details have been made available at this time.
The moves come as Tesla shares have fallen all year despite the company’s finances hitting new highs virtually every quarter.
That’s partly due to a broader market downturn in 2022, but Tesla’s stock hasn’t kept up with the rest of the market in recent months.
Here is a comparison between TSLA and NASDAQ:
The timing of the most recent declines matches Musk’s acquisition of Twitter and his sale of Tesla stock to fund the social media platform.
Some signs have also crept in lately that Tesla’s troubles aren’t just about the stock market.
The automaker recently started offering a temporary discountsand benefits on its vehicles – suggesting that Tesla potentially faces rare demand issues.
However, Tesla is not alone in implementing layoffs. Several other companies, including Goldman Sachs and Cisco, recently announced upcoming rounds of layoffs in anticipation of developments in the macro economy in early 2023.
Electrok’s Grasp
We are now entering new territories. Until now, Tesla shareholders could still cling to the idea that even if the stock does poorly, Tesla’s finances and operations are largely unaffected.
Now, it looks like there could be some worrying trends Tesla sees internally leading to these moves.
On Twitter, Musk has been talking a lot lately about macro trends and mocked claims that his Twitter antics are the reason for Tesla’s stock price plunge. Instead, he primarily blames the Fed’s rate hike.
He also warned of an impending recession. These kinds of comments from a CEO, while not necessarily wrong, are often used to justify a bad quarter. With Tesla expected to issue rebates and perks to sell cars at the end of the quarter, the company could currently see bad trends that could last well into 2023. Hence the layoffs.
At least, if Tesla’s previous rounds of layoffs and hiring freezes are any indication, the company is generally quickly starting to ramp up its workforce again.
This is inevitable with Tesla’s many manufacturing projects.
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