In one word from Musk, Tesla’s market value evaporated by nearly 500 billion

Tesla’s market value evaporated nearly 500 billion yuan in an instant because of Musk’s words.

Recently, Musk said that he has a "very bad feeling" about the economic situation and that Tesla plans to lay off 10% of its workforce.The news sent Tesla shares tumbling.On Friday, Tesla’s stock price plummeted 9.22%, closing at $703.55, with a total market value of $728.885 billion.This is equivalent to Tesla's market value evaporating more than 73 billion US dollars overnight, or about 490 billion yuan.

Image source: Musk Twitter

Perhaps affected by stock price fluctuations, on June 5, Musk tweeted, “The total number of Tesla employees (in the next 12 months) will increase, and the number of employees receiving fixed salaries will be relatively stable.” Foreign media Comments, Musk's move is to "fire fire" on Tesla's market performance on Friday, releasing optimism to the outside world.

Regarding the news of Tesla layoffs, China News Weekly asked Tesla China for confirmation, and the other party said that there was no relevant response.A person who participated in an interview at Tesla's Shanghai Lingang factory in March told China News Weekly that the onboarding that had been delayed due to the epidemic is currently recovering. Information Collection" email."I have also seen Musk's remarks, but so far my entry seems to be going smoothly." The above-mentioned person said.

Today, the fast-rising Tesla is regarded as the "leader" in the globalelectric vehiclefield, and it is also the main competitor of many traditional auto companies in the electrification transformation.Does Musk's pessimistic expectations for the economy mean that the auto industry is facing more pressure?

or not involved in EV production

Musk is a "workaholic" in the auto industry. He has previously said that he works 100 hours a week and even eats and lives in factories to urge the early delivery of Tesla models.Musk, who is hands-on, bluntly stated in an email recently that it is not acceptable for employees to work from home.It also said that everyone at Tesla must work at least 40 hours a week in the office, and if they don't want to, they will default to leaving.

Musk said the layoffs would not affect production of electric vehicles."The layoffs don't apply to any employees who actually make cars, battery packs or install solar products." He also said that although Tesla is laying off workers, the company's current total number of employees is still higher than in previous years.

Texas Gigafactory - Model Y body production line (Image credit: Tesla)

In the past two years, Tesla has expanded rapidly. According to its data disclosed earlier, Tesla will recruit 28,533 employees worldwide in 2021, a year-on-year increase of 40.3%. The new jobs are mainly concentrated in Europe and China. area.At the end of 2021, Tesla has a global workforce of 99,290 people, of which 39% are production workers.If the layoffs do not involve production workers, it means about 6,000 regular employees could be affected by the layoffs.

It is worth noting that Tesla, which has been flying all the way, has also experienced layoffs before.At the beginning of 2018, Tesla's stock price fell all the way, and Musk was even regarded as a "big liar" by investors at that time.In 2018 and 2019, Tesla cut 9% and 7% of its workforce, respectively.Musk also promised after laying off workers in 2018 that the company would never make a similar move again.

Regarding Musk’s “bad feeling” about the economy, U.S. President Biden retorted at a press conference: “Ford is investing heavily in U.S. electric vehicles and will provide more than 6,000 new jobs in the Midwest; Stellantis Group is also investing in the electric vehicle industry in the United States to produce automotive chips and create more than 20,000 new jobs.” Biden said, “If Musk thinks the economy is bad, then good luck on his trip to the moon. ."

Warning industry

It is worth noting that Tesla has delivered beautiful financial data in the first quarter of 2022 and in 2021.Tesla’s financial report for the first quarter of 2022 showed that its net profit exceeded $3.3 billion, a year-on-year increase of 658%.For the full year of 2021, the net profit attributable to the parent company will be US$7.64 billion.Tesla's ability to make money in the auto industry far exceeds that of many established car manufacturers.

Musk, who is "not bad for money", said that Tesla will "bit the bullet", which will inevitably make other players in the industry re-examine the current environment."The chances of an economic downturn are increasing. Musk and everyone else know that. But the difference between them is that as an entrepreneur, Musk is naturally more inclined to take action and tell the truth, even then It’s not popular.” Barry Engle, a former Ford and GM executive and founder of transportation-focused investment firm Qell, believes Musk’s concerns still cannot be ignored.

In fact, the automobile industry has indeed faced greater development pressure in recent years.Since 2020, the new crown pneumonia epidemic has affected both the upstream and downstream of the automobile industry chain, and many automobile factories around the world have stopped production due to the impact of the epidemic.In 2020 alone, leading companies in the automotive industry, including BMW, Mercedes-Benz, Volkswagen, and Nissan, have experienced layoffs successively.

Since then, the automotive industry has encountered cost pressures brought about by shortages of semiconductor chips, rising raw material prices and logistics costs.Since the beginning of this year, the conflict between Russia and Ukraine has further impacted the supply chain.According to data from industry data firm Wards Intelligence, U.S. new car sales in May were equivalent to an annualized 12.68 million vehicles, a weak performance and far below the 17 million vehicles sold before the epidemic.

In addition to Tesla,U.S.ride- hailing platforms Uber and Lyft said last month they would cut hiring and spending.Carvana, an online marketplace for used cars, said it would cut 12% of its workforce."We're not as pessimistic as Musk, but we're also cautious about hiring and spending," said John Dunn, Americas chief executive of Clean Energy Systems, part of auto parts giant BioGroup.

Of course, there are different views in the industry about Musk's concerns.Ford has released monthly sales figures for the U.S. market and said inventories continue to turn around at a record pace.Allyson Witherspoon, Nissan's U.S. marketing chief, also said recently: "Consumer demand is so strong right now that manufacturers don't even have inventory."

Transformation challenges

For most players in the auto industry, instead of worrying about whether the economy will get worse, they should pay more attention to the impact of iterations and reshuffles in the industry's transition to electrification.

In recent years, European car companies including Volkswagen Group, BMW, Daimler, and Stellantis have successively announced roadmaps for electrification transformation.For traditional auto companies, the transformation process inevitably requires "personnel iteration".

As early as the end of 2021, Diess, chairman of the management board of Volkswagen Group, said that Volkswagen's future jobs will be reduced again, and the direction of the automotive industry should be electrification and digitalization.Prior to this, the Volkswagen Group had laid off workers in German factories, involving more than 4,000 employees, a move that also sparked dissatisfaction among some employees.Diess emphasized on the earnings conference call that he hopes to accelerate the electrification transformation of its main factories. If the transformation progress is too slow, the company may cut as many as 30,000 jobs.

Not just the general public."By 2030, 100 percent of the cars sold by the Renault brand in Europe will be electric," said Renault CEO Luca de Meo at a media event earlier this year.The transformation of Renault is also accompanied by the iteration of personnel.At the end of last year, Renault said it planned to cut 4,600 jobs to accelerate the electrification transition and recruit 2,500 new employees in various positions between 2022 and 2024.

Honda also promoted the employee replacement plan in order to accelerate the transition to pure electric vehicles.That is to say, Honda Motor has recruited more than 2,000 early retirees within the range of employees over the age of 55 and under 64, accounting for about 5% of Honda's regular employees in Japan.This is also the first time Honda has collected early retirees in nearly 10 years.

When the continuous promotion of "intelligence" and "electrification" transformation process encounters the uncertain global economic situation and the pressure on the upstream and downstream of the automobile industry chain, the industry reshuffle is constantly intensifying, and the adjustment and reform of automobile enterprises are also accelerating.Whether or not Musk's claims about the "bad" economy are "alarmism," constantly adapting to changes in the environment and industry is a must for companies involved.