Musk is launching a sudden layoff plan within Tesla. In response to Reuters' news on June 3 that Tesla will "cut about 10% of jobs" and suspend global recruitment, Tesla China HR told the alphabet that it has not received any notice. According to Tesla's annual financial statements submitted to the US Securities and Exchange Commission (SEC) in February this year, by the end of 2021, its global number of employees was 99290, which means that the layoffs will affect nearly 10000 people.
Affected by the news, Tesla's share price fell 9.2% on Thursday local time, the biggest decline since the end of April.
After sending the layoff e-mail to the executives, musk immediately sent an explanation e-mail to all employees on Friday local time, saying that 10% of the layoff plans of the company are only for salaried employees (i.e. regular employees), because Tesla "has been overstaffed in many fields". The production line workers responsible for producing cars, battery packs or installing solar energy will not be affected, and Tesla will continue to increase the recruitment of hourly workers.
In an email announcing the layoffs, musk said: "I have a super bad feeling about the economy."
Musk has repeatedly expressed his pessimistic expectations for the economy during the year, and believes that the US economy is approaching recession. He is more dissatisfied with the democratic government of the United States headed by Biden. The two sides have forged many contradictions on the issue of trade unions and the Levy of rich tax.
In mid May, after Tesla was removed from the S & P 500 ESG index, musk publicly announced that he had changed his flag and voted for the Republican party instead of the Democratic Party.
On the night when the layoff news was exposed, musk publicly became a candidate for mayor of Los Angeles on twitter, and switched from the Republican Party to the Democratic billionaire Caruso platform. "Los Angeles citizens are lucky to have someone like rickcaruso running for mayor. He's great." Musk wrote that it should be pointed out that although Caruso joined the Democratic Party, he publicly said that "I will not be a typical Democrat", which is quite similar to the change of Musk's political tendency, and the two people have quite the same attitude towards cryptocurrency.
With repeated epidemics, conflicts between Russia and Ukraine, and swarms of black swans sweeping the world, Tesla is not the only technology company to lay off employees. According to layoff According to FYI, affected by stock prices and inflation, 66 technology companies around the world issued up to 16800 dismissal notices in May, the largest number of layoffs in a single month since May 2020.
In China, affected by the rising prices of raw materials and the suspension of work in Shanghai, car companies such as ideal and Xiaopeng, which were still grabbing people at high prices last year, were also exposed to stop recruiting, or even dismiss fresh students, and optimize the team to prepare for the winter.
Facing the bad economic situation, musk, the world's richest man, could not sit still and began to "reduce costs and increase efficiency".
A
In an email to senior executives, musk attributed the direct cause of the layoff to his "super bad feeling about the economy".
Musk's pessimistic expectations of the economy can be traced back to the beginning of the year. At Tesla's 2021 shareholders' meeting held in March this year, musk made it clear that Tesla was facing huge cost pressure at the supply chain end, so it had to raise the price of Tesla cars.
Later, he said on twitter that his company was not alone in facing inflationary pressure when global commodity prices had soared to the highest level since 2008.
The last time musk expressed his concern about the economy was on May 26. When a netizen asked him on twitter whether he thought the U.S. economy was approaching recession, musk replied: "yes, but this is actually a good thing. Throwing money on fools has been going on for too long. It's time for some bankruptcy." He also said that according to experience, the recession will last for 12-18 months.
In addition to pessimistic expectations for the future, Tesla is now in a dilemma, and the epidemic is the primary factor.
In the first quarter of this year, Tesla delivered 310048 vehicles, a year-on-year increase of 68%, including 182174 vehicles delivered by Tesla's Shanghai Super factory, accounting for 58.76% of Tesla's total global market share. In April this year, affected by the Shanghai epidemic, Tesla's domestic sales volume was only 1512, down 94.15% year-on-year and 97.70% month on month.
At present, although production has been resumed, it still needs a long time to climb if Tesla Shanghai factory wants to restore its pre epidemic capacity under the influence of epidemic prevention and control and supply chain. The "Silence" of the Shanghai plant has obviously slowed down the progress of Tesla's capacity expansion.
As a result of capacity constraints, share prices are under pressure. Recently, Dan ives, an analyst at wedbush, an investment institution on Wall Street, lowered Tesla's target price from $1400 to $1000, a decrease of nearly 30%. He said that Tesla is facing more production slowdown and supply chain bottlenecks caused by the epidemic. In addition, Musk's acquisition of Twitter is also a potential adverse factor for the decline of Tesla's share price.
As of the closing on June 3, Tesla's share price fell 9.22% to US $703.55 / share, down more than 40% from the high at the beginning of the year, and underperformed the Nasdaq 100 index.
In the context of the superposition of various adverse factors, it is not surprising that the world's richest man chose to cut his employees to "reduce costs and increase efficiency".
Layoffs are "cost reduction", and before the news of layoffs was revealed, musk had thought out measures to "increase efficiency" for the remaining employees.
On the evening of May 31, Eastern time, musk sent an e-mail to the employees with the theme of "no longer accepting remote work", requiring Tesla employees to work in the office for at least 40 hours a week, and said, "if you don't show up, we will default that you have resigned."
It is worth noting that during the epidemic, Google, meta, abiying and other technology companies have begun to allow employees to work permanently remotely. Nick bloom, an economics professor at Stanford University, believes that Musk's move will make SpaceX and Tesla lose about 10%-20% of their existing labor. Recruiters of other companies will try to poach their employees by providing more flexible work options.
Musk's move was therefore seen as a disguised layoff.
B
This is not Tesla's first mass layoff. In recent years, whenever the company faces a crisis, it has become Musk's routine to operate on employees.
Tesla's last large-scale layoff was in 2019. On January 18 of that year, at the beginning of the new year, musk sent an email to all employees, announcing that it would cut about 7% of its full-time employees.
There are two factors behind the layoffs in 2019.
The first is the impact of policy. According to the tax reform plan passed by the US Congress in 2017, the first 200000 electric vehicles sold by automobile manufacturers can receive tax credit. The tax credit is reduced by 50% every six months until it is phased out. From January 1, 2019, the federal tax rebate for U.S. electric vehicle buyers will be halved from $7500 to $3750, and further reduced to $1875 in July.
Musk said in his email: "at present, our most affordable product is the mid-range (264 miles) model 3, which costs US $44000. On July 1, the demand for the low-cost version of model 3 will become greater, because at that time, the US tax relief will be halved again, raising our car price by US $1875. By the end of the year, the preferential policy will be completely over." The pressure of price reduction brought about by the decline of tax incentives made musk start to consider layoffs.
In addition, in june2018, Tesla overestimated its own production efficiency and cut 9% of its employees. As a result, the assembly process of Model3 became what musk called a "production hell". Tesla, which was seriously understaffed, had to restart large-scale recruitment.
"Unfortunately, we have no choice but to cut about 7% of our full-time employees (an increase of 30% last year, which is beyond our ability to afford) and retain the most important temporary and contract workers," Musk said in an email It can be seen that the 30% increase in employees in 2018 is also a great pressure on Tesla.
Similar to the layoffs in 2019, Tesla employees also experienced a large-scale expansion before this layoff. According to Tesla's annual report, as of December 31, 2021, Tesla and its subsidiaries had 99290 full-time employees worldwide, compared with 70757 at the end of 2020. This means that Tesla will recruit 28533 employees in 2021, and the number of employees will soar by 40.3%.
After rapid expansion to deal with the production capacity problem and then streamlining the administration, after experiencing the previous production hell, Musk's "first recruit and then cut" Sabre technique has been perfected.
C
Tesla is not the only new energy vehicle company to lay off staff. Before that, its domestic competitor Xiaopeng, ideal, has started the "winter" mode of optimizing the team.
According to public data, the number of ideal auto employees increased from 4181 at the end of 2020 to 11901 at the end of 2021; By the end of 2021, the number of employees of Xiaopeng automobile had exceeded 13900, and the number was still 5084 by the end of 2020. According to the financial report of ideal automobile, the total employee compensation of the company in 2021 was 3.48 billion yuan, a year-on-year increase of 237%, and the per capita salary cost exceeded 290000 yuan.
Compared with Tesla, the expansion of the staff scale of the two companies is more radical. The rapid expansion has brought about a sharp rise in operating costs, which has also laid the groundwork for subsequent layoffs.
In 2022, under the double attack of the epidemic and the rise in the price of raw materials, the life of automobile enterprises is difficult. In March this year, Li Xiang, CEO of ideal automobile, said: "the increase in battery cost is outrageous. Most brands that have not yet increased their prices have not yet negotiated the increase."
Cuidongshu, the Secretary General of the passenger train Association, also pointed out: "The impact of the Shanghai epidemic on the automobile supply side is huge. Shanghai accounts for 10% of the national production, and Changchun also accounts for 10%, and the two regions together account for more than 20% of the output. However, the secondary impact of their parts and components is relatively large, especially in Shanghai, the core distribution center of parts and components. More than 80% of the parts and components are produced in and around Shanghai. Objectively, the impact of the Shanghai epidemic on the sales of passenger cars is about 40%."
Under multiple adverse factors, in May this year, ideal and Xiao Peng were successively exposed as fresh students who broke their contracts. Now, looking back at last year's car companies' "people grabbing war", it feels like a world away.
In September, 2021, many media reported the "people grabbing war" of new energy vehicle enterprises. At that time, Xiaopeng automobile offered the fresh students a pre tax salary of 12-16k, starting with 13 salaries and a maximum of 15 salaries; The year-end bonus of Weilai automobile is between 20000 and 50000 yuan, and all employees, including the new graduates, hold shares.
Li Ming, a prospective freshman majoring in automobile, told the alphabet that not only are regular employees, but many car companies have fewer internships this year than last year. "Moreover, the epidemic situation was relatively stable last year. Now we can't deliver internships in many places." Li Ming said.
For musk, who operates globally, the plate is larger and more needs to be considered. In addition to the common adverse factors of the epidemic, rising prices of raw materials and shortage of spare parts, musk should also consider the impact of the situation in Russia and Ukraine.
As a pessimistic boy, musk often warns against various problems, such as population problems and artificial intelligence. In this layoff email, musk once again warned of the economic recession, and the layoffs and salary cuts in all walks of life seem to be constantly verifying his remarks.
In this uncertain era, no one can know what will happen in the future. People just hope that Musk's warning will not come true.