Elon Musk’s electric vehicle maker Tesla is reportedly planning to make a series of layoffs as early as next quarter, according to Reuters. According to people familiar with the matter, the reason for such a move is the “Musk’s very bad feeling about the economy.” The company will also put its hiring process on hold at all of its locations around the world.“
Notably, Tesla has just resumed the hiring process after suspending it in June. At the time, Elon Musk said that a 10% reduction in its workforce would be necessary. In addition, in emails sent to employees, Elon Musk announced the end of the remote work option. In other words, those who did not want to return to the office were to leave the company. In addition, in June, Tesla announced the closure of its San Mateo office, which cost 200 employees of the EV manufacturer their jobs.
Elon Musk himself explained that the problem with Tesla’s performance is general and has to do with the stock market, which is a result of rising bank account interest rates and general market volatility rather than a specific challenge Tesla is facing.
It is unclear how long the hiring freeze will last as the company expands its factories, which means it needs to hire more employees. Recently, Tesla received the green light from the municipality of Grünheide for its planned 100-hectare expansion of the Gigafactory site near Berlin. There have also been reports about the planned water supply and workforce for Tesla’s German factory. In addition, Tesla is also reportedly expanding its business in Turkey. Notably, this market has been demanding Tesla’s services for years now.
After the announcement of the layoffs, Tesla stock closed the session down 0.17% at $137.57 per share. After hours, it added 0.58% to $138.37. Tesla’s market capitalization stands at $435.14 billion. Year-to-date, Tesla stock is down 60.95%.
Tesla’s poor performance in 2022
The EV giant is currently going through a rough patch. First, its third-quarter sales missed estimates, reporting revenue of $21.45 billion versus the $21.96 billion expected by analysts surveyed by Refinitiv. Because of the miss, Tesla stock fell. Secondly, its CEO Elon Musk keeps selling his Tesla shares, which also hurts the company’s performance. In November, following his Twitter buyout, Elon Musk sold 19.5 million Tesla shares worth $3.95 billion. Last week, he sold an additional 20 million shares of the company’s stock, with the accumulated funds totaling more than $3.5 billion. Before dumping his shares, Elon Musk owned about 25% of Tesla in shares and options. Currently, the billionaire is still Tesla’s largest individual shareholder, with 423.6 million shares giving him a 13.4% stake in the company.
In addition, after making the deal with Twitter, critics claim that Elon Musk turned away from Tesla’s business, which also led to the decline of the company.