Tesla is reportedly cutting salaried positions in north America just weeks after CEO Elon Musk warned of a ‘super bad’ feeling on the global economy.
Updated at 9:10 am EST
Tesla (TSLA) – Get Tesla Inc. Report shares pared gains in pre-market trading following a report that the clean-energy carmaker has begun a a ‘wave’ of layoffs of its salaried employees just weeks after CEO Elon Musk warned of impending job cuts.
Electrek, the tech-focused news website, said Tesla is laying-off salaried workers in north America in both its sales and delivery teams, following Musk’s early-June comments regarding a “super bad” feeling about the global economy.
The warning, in the form of a company-wide email, also comes amid what is likely to be a grim quarter for Tesla, which has seen its Shanghai factory close for 22 days, with slowing output on its re-opening, thanks to the city’s strict Covid lockdown.
Deliveries are likely to be impacted, and the group will also need to take a notable write-down on its $1.5 billion in bitcoin holdings, which are down 33% since the end of March.
Earlier this week, Tesla boosted the cost of its long-range Model Y by around 5%, to $65,990, while the base cost for the Model 3 long range sedan rose $2,000 to $57,990. Model S prices were increased by $5,000 to $104,990. The changes mark the second price increase of this year and the third since last October.
Raw materials prices, as well as labor costs linked to overall production cycles, have risen steadily over the past year, while Nickel prices — a crucial component in EV battery making — have risen around 30% so far this year to around $25,500 per ton on the London Metals Exchange, while battery-grade lithium carbonate prices are up around 60% from early 2021 levels.
Tesla shares were marked 0.2% lower in pre-market trading following the report to indicate an opening bell price of $638.50 each.
Short interest in Tesla shares remains elevated, according to recent data from S3 Partners, with bets against the stock representing around $18.83 billion in value, or 3% of the stock’s outstanding float.
The carmaker is still looking at a difficult second quarter, however, given the 22-day shutdown at its Shanghai factory, muted China-based sales owing to that country’s Covid lockdowns and the impact of a likely writedown of its $1.5 billion holding in bitcoin, which has fallen some 50% since the end of March.
Estimates of Tesla’s bitcoin carrying costs vary, but the timing of the purchase suggests a level of around $32,600. That value, of course, surged in the latter half of 2021, when bitcoin hit an all-time high of around $67,000, but now looks far more fragile after briefly crashing below the $25 level earlier this week.
Bitcoin prices were last seen trading 1.3% higher on the session at $20,631.5 each, a move that leaves the world’s biggest cryptocurrency down 54% for the quarter.
Data last week from the China Passenger Car Association (CPCA) indicated that Tesla sold 32,165 China-made cars last month, up from a two-year low of 1,152 in April.
The Shanghai factory, which re-opened on April 19 and resumed exports on May 11, produced 33,544 cars over the month of May, a 212% increase from the previous month.
Tesla said earlier this spring that current quarter deliveries should be flat when compared to the first three months of the year, even with the multi-week shutdown of its Shanghai gigiafactory — which made around half of the group’s cars last year — amid China’s ‘zero Covid’ crackdown. The full-year delivery estimate stands at 1.47 million units.
