Elon Musk is getting tough about office attendance at Tesla. No, he wants to cut jobs too. Image Credit: AP

California: Elon Musk told Tesla employees that 10 per cent of salaried workers would lose their jobs, according to people familiar with the matter, as the automaker grapples with the consequences of a swelling workforce.

The CEO said in an internal email Friday that headcount would be reduced because Tesla has become overstaffed in some areas, according to the people, who received the memo and asked not to be identified discussing the details.

Musk said in the same note that the cuts won't apply to those who build cars or battery packs, the people said. The hourly employee workforce will be expanded, according to the email.

The comments appeared to clarify Musk's stance after Reuters reported several hours earlier that the CEO told company executives he would reduce Tesla staff broadly because he had a "super bad feeling" about the economy. The news sent Tesla's shares down 9.2 per cent Friday in New York, the biggest decline since late April.

Tesla said in its annual report that about 39 per cent of roughly 100,000 workers were "production line employees."

While it's not clear if the overall headcount will be reduced, Musk's downbeat commentary marks a shift in tone for the electric-vehicle maker. Tesla recently opened two vehicle assembly plants and notched record global sales volume in its most recent quarter, while Musk predicted "substantially higher" growth later this year.

China's COVID-19 lockdown

The latest moves drew scorn from President Joe Biden, who dismissed the billionaire's warnings about the economy and wished him luck with his firm's adventures in space. They also caught some on Wall Street off guard, with Credit Suisse analyst Dan Levy calling the comments "a surprise to us given significant growth path" ahead for Tesla.

But coronavirus-related restrictions in China have crimped output at the company's Shanghai plant, leading some analysts to question whether Tesla can meet its goal of 50 per cent annual growth in deliveries. Cowen on Friday cut its estimate for the carmaker's global deliveries to 1.28 million, down from a previous estimate of 1.35 million.

The news adds to a tumultuous stretch for Tesla and Musk, with the carmaker's stock slumping since the executive struck a deal to acquire Twitter. Anxiety about the global economy and the impact of China's COVID-19 lockdown in Shanghai, where Tesla has a factory, have also weighed on the company, which has weathered worldwide supply shortages for components like chips better than most.

Musk also joined the heated debate around return to office this week, urging staff at Tesla to get back to their desks, or find work elsewhere.

"The more senior you are, the more visible must be your presence," Musk wrote, adding that employees were "required to spend a minimum of 40 hours in the office per week."