CEO of Tesla, Elon Musk freezes hiring at Tesla in all factories worldwide, as he plans to cut about 10% of salaried staff. This is coming after he stopped remote work at Tesla, ordering staff to return full time. Due to the news about a possible recession likely to occur, Elon Musk is trying to do things necessary to ensure that the company thrives regardless.
Tesla shares fell 9% in the US Trade, which has seen Elon Musk slash the salaries of his staff by 10%, as it became over staffed in many areas. In a mail sent to employees, it reads “There will be reduction in salaries headcount by 10%, as it has become over staffed in many areas, but hourly headcount will increase. Note that this does not apply to anyone actually building cars, battery packs or installing solar”.
Musk has on several occasions warned about the possible risk of recession, but the mail where he ordered a pause in hiring at Tesla as well as the slashing of staff members salary by 10% was the most direct and high-profile message of its kind.
Analysts have disclosed that the forecasting of a recession by Elon Musk would carry high credibility. So far, at Tesla, the demand for its cars and other vehicles has remained strong and many traditional indicators of a downturn, including increasing dealer inventories and incentives in the United States have not materialized.
At Tesla factory located in Shanghai China, it has struggled to restart production due to the covid pandemic lockdown that forced costly outages. A lot of analysts have also forecasted slower deliveries of Tesla Motors to the Chinese lockdown which affected its loss of output at Tesla’s Shanghai plant.
It is revealed that the Shanghai plant in China accounted for just over a third of Tesla’s global deliveries in 2021. This is likely one of the reasons why Elon musk had to stop remote work at the company. He demanded that every staff member spends a minimum of 40 hours in the office per week, as failure to show up will pass a message to the company that they have resigned.
Elon musk might not necessarily hate remote work, but with the recent crisis the company is faced with and also the forecasting of a possible recession, I think remote work might give him the feeling that his staff members will be laid back. This is no doubt a period where all hands must be on deck to keep the company afloat.
Often, when organizations are faced with different challenges, it can bring about a change in the workplace structure, which is obviously what Elon Musk is doing at Tesla. It is so serious that he had to slash the prices of team members by 100%.
Logically, no organization will enjoy paying its staff their usual amount of salary while the company’s revenue dwindles. Few analysts have also described Musk abolishment of remote work as a disguise to layoff staff, without having to have a direct layoff, because by doing so, Musk knows that there is a percentage of workers who will likely not come back.