Tesla CEO Elon Musk's "super-bad feeling" about
The economy could be the auto industry's "canary in the coal mine" moment, signaling a slowdown for an industry whose owners are worried. No sign of
Musk said the electric carmaker needs to cut about 10% of its workforce in an email to executives seen by Reuters. He later told employees that the white-collar rank was thriving and that he would continue to hire workers to make cars and batteries.
Musk's warning is the first high-profile and public disagreement in the auto industry's cohesive stance that basic demand for cars and trucks remains strong despite a two-year global pandemic. This week, an administrator called the demand "sky-high."
" Tesla isn't always your intermediate canary in a coal mine. It's like a whale in a lithium mine, " Morgan Stanley analyst Adam Jonas said in a research note, mentioning the steel applied in EV batteries.
"If the world's biggest EV agency warns approximately jobs and the investors, the financial system needs to rethink their forecasts on margins and top-line growth," he said. Tesla stock fell 9%.
The auto sector was hit by the outbreak of the COVID-19 pandemic two years ago, which forced the closure of factories. This shutdown later played a role in reducing the semiconductor chip, which further halted the production of the vehicles.
Now, Russia's invasion of Ukraine has disrupted supply chains and reduced sales. New US car sales in May ended at a weak annual rate of 12.68 million, according to Words Intelligence. This is a far cry from the glory days of 17 million years before cod.
These issues mostly affect supply, however, there is a risk of inflation.
"The recession chance is high, so what he's saying is definitely not extreme," said Jeff Schuster, president of international forecasting at LMC Automotive.
Ride-hailing companies Uber Technologies Inc. and Lyft Inc. last month said they would cut jobs and cut costs, while online used car retailer Caravana said it would cut 12 percent of its workforce.
Other companies are watching closely.
“We are not as frustrated as Elon Musk, but we are mindful of our services and costs,” said John Dunn, US CEO of Clean Energy Systems, a plastics minimum unit that provides fuel and emissions reduction systems. Makes
Industry executives are concerned about approximately a probable slowdown.
Tyson Jomini, vice president of JD Power, said: “The auto industry is moving toward a safe haven of pent-up demand, which could sell out in the coming years, as the economic storm gathers to meet this demand. Could." Automotive data and analytics.
Josh Sandbelt, a chief investment officer of Green Haven Associates, a money management firm that is a major investor in shares of General Motors, is in New York City to attend the Alliance Bernstein conference this week. He said that financial CEOs have been more depressed in their approach than other business leaders.
While Musk's e-mail seems more depressing than those of other manufacturing leaders, Sandbull said he has learned not to fire the Tesla CEO because he "bent on when other people are zigzagging, and he has been proven right. "
“We are in a time of tension, and the financial the economic agency worlds are surely now now not in agreement,” Sandblast said. "Someday, we'll find out whose right."
Many other carmakers still publicly say that basic demand is strong. Ford Motor Co., in reporting monthly US sales on Thursday, said its inventory was turning over at record rates.
Nissan Motor Company's U.S. " " Consumer call for is skyrocketing at the moment. Manufacturers don't have any inventory, " advertising and marketing leader Alison Witherspoon stated Wednesday at the Reuters Automotive Retail convention in Las Vegas.
And industry executives point out that Tesla has its own problems, including potentially faster recruitment than growth.
Tesla's jobs have doubled since the end of 2019, according to the company's annual report, and Morgan Stanley's Jonas notes that Tesla's per capita income of $853,000 does not exceed Ford's $757,000.
In addition, Tesla's US sales are concentrated in California, specifically in the San Francisco Bay Area, which is home to Silicon Valley companies.
High-tech employees who have abundant stockpiles are a major customer base for Tesla. But now, some big tech companies are running short of staff, and smaller start-ups are finding it difficult to raise funds.
That may be true, but Musk's fears can't be ignored, said Barry Engel, a former Ford and GM executive who founded Kyle, an investment-focused investment firm.
He said the possibility of economic stagnation is increasing. "Elon and everyone else knows it. The difference is that as a businessman, he is naturally more prone to act out and speak the truth, even if it is unpopular."
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