Elon Musk's 180 on Tesla Job Cuts Did Damage to His Credibility

Careless communication doesn’t go over well when the fate of roughly 100,000 employees is on the line.

According to Reuters, Elon Musk had sent an email to other Tesla executives saying he had a “super bad feeling” about the economy and wanted to dismiss 10% of the Tesla's employees. (AFP)

In November, I wrote that Elon Musk appeared to be entering an Icarus Phase. Tesla and SpaceX were on a roll, Musk's wealth was reaching new heights — his fortune peaked a day after the column published, at more than $340 billion — and he was flying awfully close to the sun.

Musk has acted even more recklessly since then, venturing far beyond Twitter swipes and potshots at the president. His antics are undermining his credibility.

Set aside the $44 billion Twitter merger agreement from which Musk is trying to renege, and consider the drama at Tesla stoked entirely by its chief executive officer.

Last Thursday evening, Reuters reported that Musk had sent an email to other Tesla executives saying he had a “super bad feeling” about the economy, and wanted to dismiss 10% of the company's employees.

It was a big scoop, and no other news organization was able to match. Tesla's overwhelming tendency the last few years has been to not engage with mainstream media. There was no blog post, no regulatory filing, no confirmation, denial, clarification or elaboration on what Reuters reported.

On Friday, Tesla's stock plunged. Long-time Tesla watchers figured a follow-up email from Musk was surely coming, and we were right. This one went to everybody in the company, with Musk writing that the cuts he'd conjured will only apply to salaried positions.

He wasn't done. In response to one of his biggest fans declaring Tesla's headcount will increase over the next 12 months, Musk tweeted Saturday that Tesla's total number of employees will increase, and that its salaried ranks “should be fairly flat.” Lest he be criticized for this complete 180, that fan and others began attacking Reuters and its initial report. Musk's mother even got in on the act.

There are big differences between cutting 10% of Tesla employees, trimming 10% of its salaried workforce, and keeping salaried personnel fairly flat. At what point does changing one's tune from one, to the next, to the next, in a three-day span lead people to stop taking the messenger seriously? This is beyond clumsy for the CEO of a company that's no longer a scrappy startup and now one of the most valuable members of the S&P 500.

Musk's admirers have been forgiving of his misfires, often because his faulty statements could be explained away as optimistic stretch goals meant to motivate his team. In May 2019, for instance, Tesla raised billions of dollars from Wall Street after Musk told investors self-driving technology had become the company's new calling. He claimed the carmaker would have 1 million robotaxis on the road the following year. Some customers are now beta-testing Full Self-Driving features, but this is a misnomer — Tesla itself acknowledges FSD is merely a driver-assistance product.

It's harder to be magnanimous when Musk writes loosely about the fate of Tesla's roughly 100,000 employees. Communicating carelessly like this will lead even Musk's staunchest supporters to be more circumspect about what he says his companies will do next.