Tesla Warns Employees of Layoffs in the Coming Year

Tesla Announces Hiring Freeze and Upcoming Layoffs

As per a report released on Dec 21, Elon Musk's Tesla is planning 

Massive layoffs and a hiring freeze as the electric car maker contends with a prolonged drop in its stock price.

Reports noted that Tesla informed employees about the hiring freeze and stated that "another wave of layoffs is coming next quarter." It wasn't immediately obvious how many Tesla employees and which divisions would be affected by the company's decision.

This year, Tesla stock has plunged more than 60% as the company deals with supply chain issues, dwindling demand in China, and intense public scrutiny over Musk's controversial Twitter takeover. Losses at the company have outpaced declines in the broader technology sector.

Possible Reasons for Layoffs & Hiring Freezes

The Tesla stock experienced a significant shift in 2022, as the economic environment changed as a result of a significant rise in interest rates and a persistent surge in inflation.

The last 4-5 consecutive interest rate hikes by the US Federal Reserve have impacted Tesla's operations and stock price. Not only Tesla, but the entire US equity market, is currently experiencing a bear market because of high inflation rates.

Experts also believe that the rate hikes have impacted the revenues of the automobile manufacturer, resulting in massive layoffs and hiring freezes. Meanwhile, the trading community believes that Musk's chaotic $44 billion takeover of Twitter in late October is weighing on Tesla's stock price.

Musk's Response to the Current Situation

Elon Musk blamed Tesla's downturn on worsening economic trends, claiming that investors are hoarding cash rather than stocks.

"As guaranteed bank savings account interest rates begin to approach unguaranteed stock market returns, people will increasingly move their money out of stocks and into cash, causing stocks to fall," Musk said.

In addition, Musk announced in June that he intended to lay off 10% of Tesla's workforce due to a "super bad feeling" about the state of the economy. The billionaire later clarified that the cuts would affect Tesla's salaried workforce, but the company planned to increase its hourly workforce.

What are your thoughts on Elon Musk's clarification on Tesla's plummeting stock prices? Share your valuable thoughts in the comment section below.

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