Elon Musk, the CEO of Tesla (TSLA.O), said in an email to Tesla executives seen by Reuters that he had a "very awful feeling" about the economy and that the electric automaker has to reduce approximately 10% of employment.
The missive, headed "stop all recruiting globally," was delivered two days after the billionaire instructed employees to return to work or go, and it joins an increasing chorus of corporate executives warning about the perils of recession.
Tesla and its subsidiaries employed about 100,000 employees at the end of 2021, according to the company's annual SEC report.
The corporation did not respond to a request for comment right away.
Tesla shares tumbled over 3% in pre-market trading in the United States on Friday, and its Frankfurt-listed stock plunged 3.6 percent following the Reuters article. Nasdaq futures in the United States have gone negative and are currently trading 0.6 percent down.
Musk has been warning about the dangers of recession in recent weeks, but his email ordering a hiring halt and staff reductions was the most direct and high-profile statement of its sort from an automaker's CEO.
So far, demand for Tesla cars and other electric vehicles (EVs) has remained high, and many usual markers of a slowdown, such as rising dealer inventories and incentives in the US, have not materialized.
However, despite expensive interruptions caused by COVID-19 lockdowns, Tesla has failed to restore production at its Shanghai facility.
"Many people share Musk's negative sentiment," said Carsten Brzeski, global director of macroeconomic research at Dutch bank ING. "However, we are not discussing a worldwide economic downturn. We anticipate a worldwide economic slowdown by the end of the year. The United States will cool, but China and Europe will not recover."
Musk's pessimistic prognosis reflects previous remarks from leaders such as Jamie Dimon, CEO of JPMorgan Chase & Co, and John Waldron, President of Goldman Sachs.
This week, Dimon stated that a "storm is just out there down the road coming our way." Inflation in the United States is near 40-year highs, producing a rise in the cost of living for Americans, while the Federal Reserve has the tough challenge of reducing demand enough to keep inflation in check without triggering a recession.
In the brief email reviewed by Reuters, Musk, the world's richest man, did not elaborate on the reasons for his "very awful vibe" about the economic prospects.
It was also unclear what, if any, implications Musk's viewpoint would have for his $44 billion offer for Twitter (TWTR.N).
Several analysts have lately lowered their Tesla price predictions, citing reduced output at the company's Shanghai factory, which serves as a center for EV production in China and for export.
According to business filings and data on sales in China, China accounted for slightly over a third of Tesla's global deliveries in 2021. On Thursday, Daiwa Capital Markets estimated that Tesla had approximately 32,000 orders in China awaiting delivery, compared to 600,000 for BYD (002594.SZ), its biggest EV competitor in that market.
According to Wedbush Securities analyst Daniel Ives, Musk and Tesla look to be "trying to get ahead of a slower delivery ramp this year and protect profits ahead of an economic slowdown," in a tweet.
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