Elon Musk’s Memo on Workforce Cut Is a Warning For the Industry

Analysts at Deutsche Bank provided their comments on Tesla, Inc. (NASDAQ:TSLA) following Elon Musk’s memo that signals a cautious outlook for the rest of the industry.
According to the analysts, Musk’s internal email targeting a 10% workforce reduction and worldwide hiring freeze at Tesla, represents a direct warning from the largest EV maker about the coming of an economic recession and its potential impact on the industry.
Tesla has so far navigated the supply chain challenges and inflationary cost pressure significantly better than its peers. Furthermore, it has a large demand backlog with wait times often extending into 2023. As such, the message on hiring freeze and workforce reduction should be taken seriously by the rest of the industry.
According to the analysts, it is possible that the company has not observed specific signs of autos demand slowdown yet but is looking to take proactive cost actions to stay ahead of the curve in light of macro risks. But this warning could also potentially imply that the company is observing pressure on the pace of new orders coming in, signaling looming demand deterioration for the rest of the industry.

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