Tesla (TSLA) has told employees that it is implementing a hiring freeze and confirmed that another wave of layoffs is coming next quarter, according to a source familiar with the matter.
In June, Elon Musk asked Tesla executives to “pause all hiring” and cut 10% of staff.
The CEO has given different reasons to different people for the layoffs, including that he has a “very bad feeling” about the economy.
Tesla has been growing fast over the years, and that often results in hiring inefficiencies that eventually lead to rounds of layoffs like this one.
The “hiring pause” was more worrisome as Tesla has several programs growing fast, and it needs to hire thousands of people at new factories in the US and Germany.
However, Tesla quickly reversed the hiring pause and started growing its hiring again during the second half of the year.
Now Electrek has learned that Tesla is implementing a new hiring freeze and plans further layoffs, according to a reliable source familiar with the matter.
Tesla has communicated to some employees that it is stopping hiring for now. On top of the hiring freeze, Tesla also said that teams will be expected to make layoffs during the first quarter of 2023.
It’s not clear how extensive the hiring freeze will be as Tesla is still planning to expand in some manufacturing locations. No further details were made available at this time.
The moves come as Tesla’s stock has been falling all year despite the company’s financials hitting new records virtually every quarter.
That’s partly due to a broader market downturn in 2022, but Tesla’s stock has not been tracking with the rest of the market over the last few months.
Here’s a comparison between TSLA and NASDAQ:
The timing of the more recent drops matches Musk’s acquisition of Twitter and his selling of Tesla shares to finance the social media platform.
Some signs have also creeped in as of late indicating that Tesla’s problems are not just on the stock market.
The automaker has recently started to offer temporary discounts and perks on its vehicles – leading to the belief that Tesla is potentially facing some rare demand problems.
However, Tesla is not alone in implementing layoffs. Several other companies, including Goldman Sachs and Cisco, have announced upcoming rounds of layoffs lately in anticipation for changing macroeconomics in early 2023.
We are entering new territories right now. Until now, Tesla shareholders could still hold on to the thought that while the stock is doing poorly, Tesla’s financials and operations are still virtually unaffected.
Now it looks like there might be some worrying trends that Tesla is seeing internally leading to those moves.
On Twitter, Musk has been talking a lot lately about macroeconomic trends and laughed at claims that his Twitter antics are the reason for Tesla’s stock price dropping. Instead, he blames mostly the fed’s rate hike.
He has also warned of an impending recession. These kinds of comments from a CEO, while not necessarily untrue, are often used to justify a bad quarter. With Tesla having to issue discounts and perks to sell cars at the end of the quarter, the company could be currently seeing some bad trends that could last into 2023. Hence the layoffs.
At least, if previous Tesla rounds of layoffs and hiring freezes are any indications, the company generally quickly goes back to growing its headcounts.
It’s inevitable with Tesla’s many manufacturing projects.
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