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Tesla to cut staff by up to 3.5%, Elon Musk says

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Yahoo Finance Live anchors discuss the Tesla’s plans to proceed with layoffs.

Video Transcript

- I thought it was really interesting. So Elon Musk spoke in an interview at the Qatar Economic Forum with Bloomberg editor in chief John Micklethwait. And Micklethwait asked him because Musk has been talking about the probability of a recession as of late. And Musk said, a recession is always coming, right?

- Right.

- You know, once a recession ends, you always know another one is on the horizon. It's just a question of how close we are. And he talked about that we could see a recession.

He says he doesn't think it is going to-- he does think it is going to be in the near term. Now what does near term mean? I don't know.

Nouriel Roubini said we're getting very close. He said he thinks it's going to happen before the end of the year. So you have this sort of spectrum of opinion. You have the Wall Street economists who I don't know that anyone is putting it at 100% probability at this point in the next 12 months.

- Right. And speaking of Elon Musk, Elon Musk also commented on the recent layoffs at Tesla. The billionaire said that the cuts will account for a loss of 3% to 3 and 1/2% of Tesla's workforce. This is after he confirmed that the salaried workforce would be cut by 10% over the next three months.

Now Musk said the salaried cuts would be offset by growth in workers who are paid hourly. Now kind of weaving this all together as well. This has a direct impact. Of course, it's just one company out of a broader employment situation that we weigh.

But this is now multiple companies that have announced that they will have some type of workforce cut in a capacity or another, whether that comes in the form of slowing down some of their hiring, whether that comes in the form of actual cuts. All of this is going to impact the near-term employment situation and where we are also kind of heating some of the calls of where the employment rate would actually need to tick up to in order for the fed's job to be done, and we had Larry Summers saying that would need to come in somewhere around 5% we could potentially see the unemployment rate tick back up to. And then what does that mean for President Biden as well, who has not necessarily looked at the moves in the stock market but has tried to tout the unemployment rate coming back down where we know we were already kind of on that pathway. It's just a matter of in-- the kind of staring down a potential recession, where unemployment would tick back up in order for the Fed to feel like inflation has also been navigated successfully as well for paring all of this together.

- Yeah, I mean, the Fed has obviously been much more focused on inflation than it has on unemployment. And if that unemployment rate went up to 5%, that would mean a lot of people will have lost their jobs if Larry Summers is correct. So we'll see what happens with that.

But getting back to Tesla for a minute, what's interesting about Tesla versus some of the other companies that have announced hiring freezes, et cetera-- Tesla is still growing, of course. And one of the things that Musk also emphasized in the interview is that effectively, Tesla is still producing as many cars as it can as quickly as it can and is trying to grow production. So it's interesting then that he is focusing on, that Musk is focusing on, some cuts at the executive level, right?

He made pretty clear it doesn't seem to be happening at the hourly level, the people who are actually making those cars. But it would be more at the management level. So that's sort of an interesting move here given the growth that we are seeing.

A couple of other takeaways, by the way, from that interview-- he talked about Twitter a little bit, and he said-- he was asked if he would be CEO of Twitter if the deal gets done. Let's leave aside the whole back and forth about the deal for a moment. He said, even if he wasn't CEO, he would drive product just as he feels he drives product at Tesla and at SpaceX. And when he was talking about free speech, he said that-- and I thought this was interesting and a bit more nuanced than we have heard in his tweets, for example--

- Yeah.

- --is that on a platform where there is almost unfettered free speech, it's still a product. You're still selling something-- in this case, ads or what have you, whatever he decides to do, if it's a paywall. You want people to be comfortable on the platform.

- Right.

- So you don't want it to be so offensive that you drive users away. So he suggested perhaps some kind of settings where you-- maybe almost anyone would be allowed on the platform, and free speech would be allowed. But you could somehow have more control over what tweets you see and what kind of content you see and do not see.

- Well, that's similar to what Jack Dorsey was talking about previously in trying to have an algorithm that is more catered towards you where you actually are able to pick the type of algorithmic settings to really have a parameter or a limitation on the types of content that you do see on that. So Jack Dorsey had brought that up previously.

- But they haven't done it.

- But they haven't done it.

- Right. That hasn't happened. Right now, you sort of have to block by user--

- Right.

- --to restrict the type of content. And then one more takeaway from that interview, which is it's always striking to me the Elon Musk Twitter persona and sort of the troll persona versus something like an interview in front of an international audience, including, by the way, Qatar, which is one of his investors--

- Right.

- --in the Twitter deal. And so he sounds much more measured and nuanced in this type of a setting and more like a traditional CEO certainly than he does on Twitter, where he enjoys trolling people and posting memes.

- I have sat front row and seen him at an event before, and he sounds amazingly inspirational in front of an audience. But then you pair that to your point--

- Right.

- --with what you see via a Twitter-- Twitter fingers, if you will.

- Yeah, it's really interesting.