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Elon Musk Says Tesla Job Cuts Will Reduce Workforce by 3.5%

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·4 min read
Elon Musk Says Tesla Job Cuts Will Reduce Workforce by 3.5%
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(Bloomberg) -- Elon Musk confirmed the salaried workforce at Tesla Inc. would be cut by about 10% over the next three months, but said the overall reduction in the electric-car maker’s headcount would only be some 3.5% as hourly staff numbers are still expected to grow.

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“We grew very fast on the salaried side,” Musk said in an interview with Bloomberg News Editor-in-Chief John Micklethwait at the Qatar Economic Forum on Tuesday. “A year from now, I think our headcount will be higher” in salaried and hourly workers, but for now the reduction will be 3% to 3.5%, he said.

The comments brought more clarity to the situation with Tesla’s staffing, after Musk made varied internal and public statements about reductions over the past month.

Six Takeaways From What Elon Musk Said at Qatar Economic Forum

Tesla, now headquartered in Austin, Texas, has grown to about 100,000 employees globally, hiring rapidly as it built new factories in Austin and Berlin. The cuts, which have affected human resources representatives and software engineers so far, caught many by surprise, with several employees told they were being terminated immediately. Two workers at Tesla’s battery factory near Reno, Nevada, allege the company didn’t comply with the 60-day notification requirement under the Worker Adjustment and Retraining Notification Act, according to a lawsuit they filed late Sunday in federal court in Austin.

“Let’s not read too much into a preemptive lawsuit that has no standing,” Musk said in Tuesday’s interview via video link.

The reductions come as Musk, 50, wades into the debate over work-from-home, a polarizing issue for employees and companies alike as they navigate the return to normality as the pandemic recedes. Earlier this month, the Tesla chieftain issued an ultimatum for staff at the company to return to the office -- or leave.

“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week,” Musk wrote in an email titled “To be super clear.” “Moreover, the office must be where your actual colleagues are located, not some remote pseudo office. If you don’t show up, we will assume you have resigned.”

“The more senior you are, the more visible must be your presence,” Musk wrote. “That is why I lived in the factory so much -- so that those on the line could see me working alongside them. If I had not done that, Tesla would long ago have gone bankrupt.”

The mandate has also spooked workers at Twitter Inc., who have had a work-from-anywhere policy throughout the Covid-19 pandemic. Before sealing his deal to buy the social-media platform, Musk floated the idea of turning its San Francisco headquarters into a homeless shelter because “no one shows up anyway.”

In contrast, he has praised workers at Tesla’s Shanghai factory. Many lived and worked on-site to keep production running through much of the Chinese city’s two-month Covid lockdown earlier this year.

“I am very impressed with the car companies in China, just in general companies in China,” Musk said Tuesday. “I think they’re extremely competitive, hard-working and smart.”

As for competition from the world’s leading automakers, Musk said Tesla doesn’t really think about possible rivals. The main issues the company face are to do with supply chains and its own production capacity.

“Demand for our cars is extremely high and the wait-list is long,” he said. “We really don’t think about competition -- we just think about how do we address the limiting factors in the supply chain and in our own industrial capacity.”

“Basically, we need to build the factories faster,” he said. “And then we need to look ahead to whatever the choke points are in the whole lithium-ion battery supply chain from mining and refining to cathode and anode production and cell formation.”

For more on Musk at Qatar Economic Forum, click here for our TOPLive blog. Or read a full transcript of the interview.

Qatar’s Ministry of Commerce and Industry, Qatar Investment Authority and Investment Promotion Agency Qatar are the underwriters of the Qatar Economic Forum, Powered by Bloomberg. Media City Qatar is the host organization.

(Updates with more comments from Musk in second and third paragraphs.)

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