Tesla plans layoffs, hiring freeze amid economic downturn and Musk's distraction with Twitter

After cutting thousands of jobs at Twitter, Elon Musk-led Tesla has now told employees that it is implementing a hiring freeze. The company also confirmed that another wave of layoffs is coming next quarter.

According to a report by Electrek, this comes months after Elon Musk had asked Tesla executives to “pause all hiring” and cut 10 per cent of staff in June.

At the time, the CEO gave different reasons to different people for the layoffs, including that he has a “very bad feeling” about the economy.

Tesla has communicated to some employees that it is stopping hiring for now. On top of the hiring freeze, Tesla also said that teams will be expected to make layoffs during the first quarter of 2023, the report added.

It’s not clear how extensive the hiring freeze will be as Tesla is still planning to expand in some manufacturing locations. No further details were made available at this time. This has come at a time when Tesla's stock has been in a freefall.

In the past year, Musk has sold about $40 billion worth of Tesla shares, primarily for financing his $44 billion Twitter acquisition and to run the company after completing the deal. However, Musk has now promised that he will not sell any more Tesla stock for about two years.

Read: Elon Musk to not sell more Tesla stock for about two years

While speaking in a Twitter Spaces audio chat, Musk said he foresees the economy will be in a "serious recession" in 2023 and demand for big-ticket items will be lower. "I won't sell stock until I don't know, probably two years from now. Definitely not next year under any circumstances and probably not the year thereafter," Musk said.

The stock has also taken a hit due to the softened demand for electric cars. Tesla's shares are on track for their worst month ever as a sell-off deepened on Thursday.

The stock dropped almost 10 per cent on Thursday to its lowest level since September 2020 after the automaker's website showed it was offering $7,500 discounts on Model 3 and Model Y electric vehicles delivered in the United States this month.

Read: Tesla shares down over 8% after US discounts doubled on key models