Elon Musk’s Tesla is reportedly planning to downsize its workforce and place a hiring freeze beginning the first quarter of 2023. According to a report by Electrek, citing people familiar with the matter, Elon Musk gave different reasons for the layoffs to different people. The report adds that Elon Musk simply has a ‘very bad feeling’ about the economy.

The Twitter CEO had in late November also cautioned about a possible recession in the United States if the US Federal Reserve continued with its path of interest rate hikes to tame inflation.

‘Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession,’ Mr Musk tweeted.

Tesla Has Reportedly Communicated to Some Employees

In addition, Tesla has been growing rapidly over the years, and such expansion usually leads to hiring inefficiencies that end up with rounds of layoffs. But the planned hiring freeze might be a concern given that Tesla needs additional staffing for its new Gigafactories in the United States and Germany.

The report added that the electric vehicle manufacturing company has already started communicating with some employees regarding the changes scheduled for next year.

Elon Musk Plans to Step Down as Twitter CEO

News of potential layoffs and downsizing at Tesla coincides with Elon Musk’s most recent decision to step down as Twitter’s CEO as soon as a replacement ‘foolish enough’ is found. However, Elon Musk will step into a new role of running the software and server teams at Twitter once a new CEO is found.

His job at the helm of Twitter has, since October, caused anxiety amongst Tesla fans, investors and Wall Street analysts who believe that the social media company was a distraction away from the more important job of steering the EV company during a potential economic downtown and the impact of China suddenly easing its strict COVID19 restrictions. The full reopening of China has been speculated to have a potentially massive impact on production at Tesla’s Gigafactory in Shanghai.

(By John P. Njui)