What happened
Reports Friday that Tesla (TSLA -3.40%) CEO Elon Musk had a "super bad feeling" about the economy, and might be preparing to lay off as many as 10% of its 100,000-strong global workforce sent shares of the electric car giant -- and other electric car companies -- tumbling to close out last week. Today, the opposite is happening.
As of 10:10 a.m. ET Monday, not only is Tesla stock back in the green with a 2% gain, but Chinese electric car makers Nio (NIO 5.26%) and Li Auto (LI -5.57%) are doing even better, rising 6.4% and 12.7%, respectively. So what's up with that?
Image source: Getty Images.
So what
This morning, Deutsche Bank warned that Tesla's Friday emails constituted a "direct warning" of "looming demand deterioration" for electric cars of all makes and models. The banker didn't actually take the next step and downgrade automotive stocks in response to this warning -- but it did sound nervous.
But here's the thing: Tesla didn't actually say it was laying off 10% of all its workers, but rather 10% of just its "salaried headcount" -- its office workers, in other words. These are the same folks Musk had advised, earlier in the week, to "pretend to work somewhere else" if they didn't want to come back to the office.
Indeed, to sharpen the point, over the weekend Musk went on Twitter to clarify that Tesla expects that its salaried workforce will remain little changed, while its total headcount -- including primarily the line workers who actually build the company's cars, will increase this year.
Total headcount will increase, but salaried should be fairly flat
-- Elon Musk (@elonmusk) June 4, 2022
Now what
Meanwhile, in China, the South China Morning Post (SCMP) reported last week that demand for electric cars looks strong as COVID-19 restrictions on movement begin to lift. The exact opposite of Deutsche's warned "demand deterioration," SCMP notes that deliveries of cars from both Nio and Li -- and peer XPeng -- rebounded in May. Nio's deliveries shot up 38% sequentially in May, while Li's deliveries more than doubled month over month.
Suffice it to say these are not the kinds of numbers you would expect to see if demand for electric cars were really deteriorating, and if Tesla were cutting workers to prepare for a downturn. To the contrary, the rebound in deliveries in China tallies more closely with Musk's assertion that he's increasing his headcount, particularly of factory workers who do the hands-on work of building electric cars.
While surging deliveries at competing companies might not ordinarily be the kind of news you'd think would be good for Tesla -- in this particular instance, it is good news.
