Tesla’s Elon Musk is catching more hell over the latest bit of news — 10% job cuts, a hiring pause — and, as usual, it’s being taken way out of context. Yahoo! News reported that U.S. Labor Secretary Marty Walsh wanted Elon to call him, as “Tesla CEO eyes mass layoffs” (Yahoo!‘s phrasing, not Walsh’s.) According to the article Walsh said:
“I had a conversation with Mr. Musk about two months ago.
“I would love to follow back up with him about what more we can do as a government. Quite honestly, this is not just a government response. This is a business response as well [as a response to] where we are headed with the economy.
“Certainly Elon Musk is a very smart person and he is looking at where he is in the economy, where the company is.
“I am hopeful that won’t happen out there. I am hopeful as we continue to move forward we will continue to see our economy get stronger.”
Reuters initially reported that Elon Musk “feels ‘super bad'” about the economy and needed to cut 10% of its salaried staff.
What isn’t being reported, as far as I was able to tell so far, was that Elon Musk said, “Note, this does not apply to anyone actually building cars, battery packs, or installing solar. Hourly headcount will increase.”
You can thank @WholeMarsBlog for sharing a screenshot of the actual email.
Here is @elonmusk emailing the Tesla team about layoffs.
Note that this will not apply to anyone actually building cars, battery packs, or installing solar. pic.twitter.com/nLK4Jigroa
— Whole Mars Catalog (@WholeMarsBlog) June 3, 2022
As pointed out in the tweets below, the story is sensationalized. Tesla has been hiring thousands of employees and the idea of 10% of 100,000 being laid off seems shockingly alarming. And it would be. However, I doubt that Tesla has 100,000 salaried employees. To call this a mass layoff is highly misleading. The focus should be on why Tesla is having to lay off anyone.
Part of it may be about the economy, but this is actually a routine thing that Elon does at Tesla in order to cut back on the internal bureaucratic crust that builds up in a large corporation. He went through such a process a few years ago as well and talked about that at the time. In fact, it is routine across many large corporations, because it is an important solution to a natural organizational challenge.
This is more or less standard operating procedure for Tesla (see 2018)
My condolences to anyone who will be affected but overall it is a sensationalized story.
Tesla’s headcount is much bigger than it was a year ago, and next year it’ll be bigger than today.
this is healthy pic.twitter.com/XavFWNEYr0
— Whole Mars Catalog (@WholeMarsBlog) June 3, 2022
Regarding the current state of the tech industry, which has seen valuation hits in recent months as the economy has bounced back and the Fed has started working to raise interest rates and cut inflation, if you do a simple Google News search on the word “layoffs,” you will find that several tech companies are laying off workers. May had the highest rate of laid-off employees by tech companies since 2020. Articles cite rising interest rates and a stock market sell-off as squeezing startups and big tech firms.
A total of 66 tech firms laid off 16,800 employees in May, which is more than the 13,600 layoffs across 52 companies during the first four months of 2022 combined.
Avoiding that context and only blaming Tesla or Elon Musk for what is standard practice across the industry, and even more broadly a routine procedure across large corporations in order to keep themselves from becoming too bloated with salaried executives and managers, is mistaken at best and disingenuous at worst.
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