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Elon Musk says ‘inevitable’ US recession will probably come soon

Musk’s comments, echoing other CEOs, are accompanied by plan to lay off 10% of Tesla’s salaried staff
Elon Musk says ‘inevitable’ US recession will probably come soon

Musk’s comments, echoing other CEOs, are accompanied by plan to lay off 10% of Tesla’s salaried staff

Elon Musk

Elon Musk has warned that a US recession is “more likely than not” to come soon as the Tesla chief executive confirmed plans to cut 10% of salaried staff at the electric carmaker over the next three months.

The world’s richest man said a recession in the US was inevitable but would most probably come in the short term.

“A recession is inevitable at some point. As to whether there is a recession in the near term, that is more likely than not,” Musk said in an interview via videolink at the Qatar Economic Forum in Doha on Tuesday.

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Musk said Tesla was planning to reduce salaried staff numbers by 10%, confirming plans revealed in an internal email this month by Reuters.

“Tesla is reducing its salaried workforce by roughly 10% over the next probably three months or so,” Musk said at the event hosted by Bloomberg. “We expect to grow our hourly workforce. But we grew very fast on the salaried side, and we grew a little too fast in some areas.”

Tesla employs just under 100,000 people but Musk said the cuts would amount to a reduction of about 3.5% because salaried workers represent around one-third of the workforce, while Tesla is increasing the amount of staff it employs on an hourly basis, who account for about two-thirds of the workforce.

Musk’s outlook echoes comments from other executives, including JPMorgan boss Jamie Dimon, who warned this month that a “hurricane is right out there down the road coming our way”. The US president, Joe Biden, reiterated on Monday that he felt a US recession was not inevitable, even as the world’s largest economy struggles to tackle high petrol prices and inflation, which is at its highest in 40 years. Former US treasury secretary Lawrence Summers told NBC News on Sunday that he too expected a recession.

Musk also spoke about his $44bn (£36bn) bid to buy Twitter, which received a formal endorsement from the social media firm’s board on Tuesday.

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Musk said there were unresolved issues, including the debt portion of the deal and the number of spam users. Lawyers representing the Tesla boss have warned he could walk away from the deal due to a dispute over how Twitter calculates the number of fake or spam accounts on its platform.

“We’re still awaiting resolution on that matter, and that is a very significant matter,” he said, reiterating doubts over Twitter’s claims that false or spam accounts represented fewer than 5% of its 229m daily active users.

Musk also expressed doubt about the debt funding for the deal, which is being raised from a consortium of banks that have pledged $13bn.

“And then of course, there’s the question of, will the, the debt portion of the round come together? And then will the shareholders vote in favour?”

Musk said he would like to get 80% of North America and half the world on Twitter. “My aspiration for Twitter is to be as inclusive as possible,” he said.

Topics
  • Elon Musk
  • Tesla
  • Technology sector
  • Electric, hybrid and low-emission cars
  • US economy
  • Global economy
  • Twitter
  • news
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