According to the news on June 4, Beijing time, the "super bad feeling" of CEO Elon Musk of Tesla about the economy may become the "canary in the mine" moment of the automotive industry, which indicates that the automotive industry is declining, but the bosses of the industry have not shown any signs of concern**
A canary in a mine is a harbinger of danger. Canary is more sensitive to harmful gases than human body, so canary has become an alarm for miners.
Musk said in an email to senior executives that Tesla needs to cut about 10% of its staff. He later told the employees that the white-collar class of the company was too bloated and needed to "slim down", but he would continue to hire workers to produce cars and batteries.
Musk makes different sounds
Musk's warning is the first public and loud different voice in the current unified position of the automotive industry. The automotive industry agreed that although the global epidemic has lasted for two years, the potential demand for cars and trucks remains strong. An auto industry executive also said this week that the demand was "extremely high".
"Tesla is not an ordinary canary in a coal mine. It is more like a whale in a lithium mine." Morgan Stanley analyst Adam Jonas said in a research report. Lithium is a metal used in the production of electric vehicle batteries.
He added: "if the world's largest electric vehicle company warns about employment and economic problems, investors should reconsider their forecasts for profit margin and revenue growth." At the close of trading on Friday, Tesla shares fell 9%.
The supply chain has been frustrated
Two years ago, the automobile industry was hit hard by the outbreak of COVID-19, and factories were forced to close. That shutdown later led to a shortage of semiconductor chips, further hindering automobile production.
Today, the Russian Ukrainian war has exacerbated the chaos of the supply chain and dragged down car sales. According to the data of industrial data company wards intelligence, the annual sales volume of new vehicles in the United States in May was only 12.68 million, far lower than the glorious days of 17million vehicles a year before the outbreak of the epidemic.
However, these problems mainly affect supply, while inflation poses a threat to demand. "The risk of economic recession is very high, so what he said is certainly not extreme," Jeff Schuster, President of LMC automotive global forecasting, a consulting firm, said of Musk's warning.
Uber and LYFT, online car Hailing companies, said last month that they would reduce the scale of recruitment and expenditure. Carvana, an online used car retailer, said it would cut 12% of its workforce.
Not so pessimistic
Other companies are also keeping a close eye on the economic situation. "We are not as pessimistic as musk, but we are cautious about our recruitment and expenditure," said John Dunn, US CEO of clean energy systems, a subsidiary of plastic Omnium and a manufacturer of fuel and emission reduction systems.
Industry executives worry about a possible recession. Tyson Jominy, vice president of automotive data analysis at J.D. Power, a market information company, said: "the automotive industry is competing to release pent up demand, which may drive sales in the next few years, while the clouds of the upcoming economic storm are gathering, which may destroy most of the demand."
Greenhaven associates, a fund management company, is one of the major investors in General Motors' stocks. Josh sandbulte, its chief investment officer, has been attending the alliance Bernstein conference in New York this week. He believes that financial CEOs are far more pessimistic about the prospects than other business leaders.
Although Musk's e-mail sounds much more pessimistic than other manufacturing leaders, sandbert said that he has learned not to ignore Tesla CEO's remarks, because "when others are making a sharp turn, he has completed a sharp turn, and the facts have proved that he is right".
"We are in a period of chaos. Frankly, financial and business leaders do not agree with this," sandbert said. "At some point, we will know who is right."
Tesla's own problems
Many other carmakers have publicly stated that potential demand remains strong. Ford said in its monthly U.S. sales report on Thursday that its inventory continued to turn around at a record pace.
"Consumer demand is very high now. Manufacturers have no inventory," Allyson Witherspoon, Nissan's U.S. marketing director, said at the Reuters auto retail conference in Las Vegas on Wednesday.
Industry managers also pointed out that Tesla also has its own problems, including that compared with its growth rate, the recruitment rate may be too fast.
According to the annual report released by Tesla, the number of employees of the company has doubled since the end of 2019. Jonas of Morgan Stanley pointed out that Tesla's income per employee was $853000, which was not much higher than the larger Ford's income of $757000.
In addition, Tesla's sales in the United States are mainly concentrated in California, especially in the San Francisco Bay area where Silicon Valley companies gather. The wealth of high-tech employees is based on stocks and is an important customer group of Tesla. But now, some large technology companies are laying off workers, and smaller start-ups find it more difficult to obtain funds.
Barry Engle, a former Ford and General Motors executive, believes that all these may be true, but Musk's concerns cannot be ignored. Engel founded qell, an investment company focusing on transportation.
"The possibility of economic recession is increasing," he said. "Musk and others know this. The difference is that as an entrepreneur, he is naturally more inclined to take action and tell the truth, even if it is unpopular." (author / Xiao Yu)