Elon Musk Says Tesla Cutting 10% of Salaried Workers, 3.5% of Total Workforce

Mandatory Credit: Photo by Stephen Lovekin/BEI/Shutterstock (12920948pr)Elon MuskCostume Institute Benefit celebrating the opening of In America: An Anthology of Fashion, Arrivals, The Metropolitan Museum of Art, New York, USA - 02 May 2022.
Stephen Lovekin/BEI/Shutterstock / Stephen Lovekin/BEI/Shutterstock

Elon Musk has clarified how many employees at Tesla will be losing their jobs, following comments he made earlier this month about staff reduction.

Speaking at the Qatar Economic Forum on June 21, Musk said his electric vehicle (EV) company’s workforce would be reduced by 10% over the next three months, but that the overall headcount reduction would only be around 3.5% because hourly staff numbers are still expected to grow, according to Bloomberg.

“We grew very fast on the salaried side,” Musk said at the Qatar Economic Forum, according to Bloomberg. “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%.”

Earlier this month, Musk said he had a “super bad feeling” about the economy in an internal email to Tesla execs, as GOBankingRates previously reported. At the time he wrote, “Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas. Note, this does not apply to anyone actually building cars, battery packs or installing sloe. Hourly headcount will increase.”

As of December 31, 2021, Tesla had 99,290 employees, according to its annual report. Shares of Tesla — which have been struggling since Musk’s $44 billion Twitter acquisition was announced in April — are down 43% year-to-date, but are actually up about 5% Tuesday following the job cuts update.

Musk’s clarification on reducing workforce follows a June 19 lawsuit against the EV company, filed by two former Tesla employees who were terminated earlier this month from Tesla’s gigafactory plant in Nevada. They claim that Tesla’s decision to carry out a “mass layoff” violated federal law as the company did not provide advance notice of the job cuts, Reuters reported.

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According to CNBC, Musk dismissed the importance of the suit Tuesday at the Qatar Forum, saying it has no standing. “That is a small lawsuit of minor consequence,” he said. “Anything that relates to Tesla gets big headlines, whether it is a bicycle accident or something much more serious.”

Musk’s clarification also comes on the heels of a Bloomberg Intelligence report, which says that Volkswagen will overtake Tesla in EV sales by 2024.

“Looking ahead, automakers in Europe, China and elsewhere will continue to challenge Tesla via an impending wave of new models, though profit incentives are limited amid rising battery costs and a lack of scale,” Michael Dean, Senior European Automotive Industry Analyst at Bloomberg Intelligence, said in the report’s press release.

Volkswagen, however, is the exception and is on track to launch an IPO of its Porsche brand in the fourth quarter, the report notes.

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