Tesla: As Musk Clarifies Staff Cuts, Goldman Sachs Calculates Savings

© Reuters.

By Senad Karaahmetovic

Elon Musk used Twitter again to clarify that Tesla (NASDAQ:TSLA) actually plans to increase its total headcount over the following 12 months, though the number of paid employees is likely to be a little changed.

His comments come just two days after Musk said that the carmaker needs to cut 10% of its workforce.

"Total headcount will increase, but salaried should be fairly flat," Musk replied to an unverified Twitter account that forecasted that the electric vehicle maker’s total headcount would rise in the next 12 months.

On Thursday, Musk sent an email to Tesla executives, saying he feels very concerned about the state of the U.S. economy and needed to reduce 10% of its Tesla workforce.

A day later, Tesla's boss sent a separate email to employees where he said the carmaker plans to cut salaried headcount by 10% as the company has become “overstaffed in many areas,” though “hourly headcount will increase,” he wrote.

The world’s largest electric vehicle (EV) company and its subsidiaries had nearly 100,000 employees at the end of 2021, according to the company’s regulatory filing.

Before announcing changes on headcount numbers, Musk sent an email to Tesla staff on Wednesday where he requested a minimum of 40 hours a week of office work. Those who do not come back to the office, “we will assume you have resigned," Musk wrote.

Goldman Sachs analyst Mark Delaney calculates that a 10% workforce reduction would translate into ~$0.225-$1.0 billion in annual opex savings.

“Mr. Musk's comments on Twitter of salaried headcount being fairly flat suggest the company's plan is to limit cost growth and not reduce opex overall,” Delaney said in a client note.

“Our base case assumption is for opex including SBC to rise by an average of about $255 mn per qtr from 2Q22 through 4Q22, by $1.9 bn in 2022 yoy, and by $2.6 bn in 2023 yoy. Each $100 mn of opex is about $0.06-$0.08 of EPS.”