Saying the road ahead was “very difficult,” Tesla’s CEO Elon Musk said Friday that the company would be cutting its staff by about 7 percent.
The electric car and solar panel maker notified its employees about the staff cuts and other plans in an email posted on Tesla Inc.’s website.
Musk said Tesla hopes to post a “tiny profit” in the current quarter but a 30 percent expansion in its workforce last year was more than it can support.
Tesla’s shares tumbled earlier this month after it cut vehicle prices by $2,000 and announced fourth-quarter sales figures that fell short of Wall Street estimates.
“Our products are too expensive for most people,” Musk said in the memo to Tesla staff, saying the company has to “work harder.”
“Tesla has only been producing cars for about a decade and we’re up against massive, entrenched competitors,” he said.
Musk said in a tweet in October that Tesla, based on Palo Alto, California, had 45,000 employees. A 7 percent cut would involve laying off about 3,150 people.
“We unfortunately have no choice but to reduce full-time employee headcount by approximately 7 percent ... and retain only the most critical temps and contractors,” he said.
The company says it delivered over 245,000 electric cars and SUVs last year, nearly as many as all previous years combined. But its 2018 production fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year. That goal was announced in May of 2016 based on advance orders for its mid-range Model 3, which Musk said sells for $44,000.
Musk said Tesla plans to ramp up production of the Model 3, “as we need to reach more customers who can afford our vehicles.”
“Attempting to build affordable clean energy products at scale necessarily requires extreme effort and relentless creativity,” he said in the memo, “but succeeding in our mission is essential to ensure that the future is good, so we must do everything we can to advance the cause.”
Tesla broke ground earlier this month for a factory in Shanghai, its first outside the US. Musk said it plans to begin production there of the Model 3 and a planned crossover by the year’s end.
Tesla and other global automakers including General Motors Co., Volkswagen and Nissan Motor Corp. are pouring billions of dollars into manufacturing electric vehicles in China.
Tesla plans 7% staff cut as CEO Elon Musk says company must ‘work harder’
Tesla plans 7% staff cut as CEO Elon Musk says company must ‘work harder’
- Tesla delivered over 245,000 electric cars and SUVs last year, nearly as many as all previous years combined
- But its 2018 production fell far short of a goal set nearly three years ago of manufacturing 500,000 vehicles for the year
Private sector drives 6.1% rise in Saudi capital investment for Q2
RIYADH: Saudi Arabia’s gross fixed capital formation reached SR296 billion ($79 billion) in the second quarter of 2024, marking a 6.1 percent year-on-year increase, according to recent data.
The Ministry of Investment attributed this growth primarily to the non-government sector, which holds an 86.45 percent share of total GFCF.
This sector saw an 8.2 percent increase, reaching SR255.9 billion, reflecting robust private-sector activity aligned with Vision 2030’s targets to boost private investment. Conversely, GFCF in the government sector declined by 5.2 percent to SR40.1 billion.
GFCF, which measures net investments in assets like infrastructure, machinery, and construction, is a key indicator of long-term economic potential, as it reflects capacity-building investments that drive productivity and growth.
Saudi Arabia’s appeal as a top investment destination continues to grow, with the Ministry of Investment issuing 3,810 licenses in the third quarter — a 73.7 percent annual rise, excluding permits from the Tasattur anti-concealment initiative.
This strong performance highlights the Kingdom’s successful positioning as a competitive market, driven by an increasingly stable and business-friendly environment, according to the report.
The ministry’s October report, which aligns its data with the latest IMF guidelines, showed that Saudi Arabia’s foreign direct investment stock reached SR897 billion in 2023, a 13.4 percent increase from 2022.
Excluding the one-time SR55 billion Aramco pipeline deal, the data showed that net inflows — representing the total new foreign capital coming into the country after accounting for outflows — also surged by 91 percent during this period, reaching SR86 billion.
As Saudi Arabia pushes toward its goal of making FDI 5.7 percent of its gross domestic product by 2030, this upswing in foreign capital not only strengthens the Kingdom’s position as a global investment hub but also reinforces the ongoing expansion in GFCF, contributing to sustainable economic growth.
Saudi Arabia has been advancing a range of initiatives to attract and deepen foreign investment, positioning itself as a hub for international business in the Middle East.
One such measure, announced in 2021, requires foreign companies bidding for government contracts to establish regional headquarters within the Kingdom by 2024.
This mandate has already encouraged major firms to set up shops in Riyadh, underscoring the Saudi government’s commitment to drawing long-term investment.
The Public Investment Fund has also played a critical role in bolstering the investment landscape.
Recently, PIF signed a memorandum of understanding with Brookfield Asset Management to become an anchor investor in Brookfield Middle East Partners.
This private equity platform plans to raise $2 billion to invest in various high-growth sectors, such as technology, healthcare, and industrials. Additionally, at least half of BMEP’s capital will be allocated to Saudi-based companies, facilitating FDI inflows directly into the Kingdom.
Another major win came with BlackRock, the world’s largest asset manager, which recently secured approval to establish a regional headquarters in Riyadh.
This move is set to expand BlackRock’s Middle East operations significantly, reinforcing Saudi Arabia’ appeal as an investment destination for global financial firms.
Energy sector drives GCC IPO gains in Q3, positive year-end outlook: PwC
RIYADH: Initial public offerings across the Gulf Cooperation Council region registered a year-on-year increase in proceeds in the third quarter of 2024, despite a decline in the number of listings, according to a new report.
The energy sector spearheaded this quarter’s growth, led by NMDC Energy’s listing, which raised $877 million — the largest IPO in the UAE this year, stated PwC Middle East.
Saudi Arabia’s parallel market, Nomu, also contributed to the quarter’s performance, with three listings.
PwC forecasts strong aftermarket performance for companies completing IPOs in 2024, predicting that most of the top 10 IPOs by deal size will trade above their initial offering prices.
This outlook suggests a favorable market reception for large IPOs in the coming year, with strong investor demand potentially driving post-IPO stock prices higher.
“As has been the case in recent years, Q3 has seen relatively few companies come to market. Since the end of the quarter, we have seen a number of IPOs either completed or announced across the GCC, including OQ Exploration and Production, Oman’s largest ever IPO, supporting the positive outlook for the remainder of 2024,” said Muhammad Hassan, capital markets leader at PwC Middle East.
In the third quarter, bond issuances in the GCC raised $4.4 billion, marking an almost 30 percent increase over the previous year.
Additionally, $5.2 billion was raised through sukuk issuances, with 88 percent of these bonds listed on the Qatar Stock Exchange or Nasdaq Dubai.
Governments in the region accounted for nearly 65 percent of total bond and sukuk issuances.
“Looking forward, the outlook for the GCC IPO market remains positive with a healthy IPO pipeline of companies from a diverse range of sectors busy preparing for their upcoming IPOs across the region,” the report stated.
Saudi-Portuguese Business Council launches investment regulation initiative to boost trade
RIYADH: Saudi Arabia and Portugal are aiming to increase awareness of investment regulations in both countries to boost trade thanks to a first-of-its-kind initiative.
Announced by the Federation of Saudi Chambers, the Saudi-Portuguese Business Council signed a memorandum of understanding with Ibrahim Al Howishel Law Firm to facilitate the entry of Portuguese companies into the Kingdom.
The MoU will also encourage regional companies to invest in Portugal by acting as a legal advisor. It will be the first of its kind among Saudi foreign business councils within the federation.
Its objective is to increase the number of international investors in the Kingdom by informing them about the positive developments, regulatory environment, and investment landscape.
Walid Al-Balhan, chairman of the Saudi-Portuguese Business Council, emphasized that the recently signed MoU aligns with Saudi Arabia’s Vision 2030, which aims to attract foreign investment and strengthen international business ties.
He also said the advisor would address investor queries and provide guidance on regulations, building confidence among Portuguese companies looking to enter the Kingdom.
He extended his gratitude to the Federation of Saudi Chambers and relevant government bodies for their support of the council’s initiatives.
Under the agreement, both parties will collaborate with the Kingdom’s authorities to host workshops for Portuguese firms interested in the Saudi market.
These sessions are expected to cover key topics, including the Premium Residency system, foreign investment regulations, and company setup processes, as well as strategic investment opportunities and incentives for firms considering relocating their headquarters to Saudi Arabia.
The agreement also includes cooperative efforts to refine investment procedures for Saudi companies in Portugal, propose incentives for entities from the European country to attract investors within the Kingdom, and provide advisory support for companies in both nations.
Oil Updates – crude trades in tight range ahead of US election
SINGAPORE: Oil prices traded in a narrow range on Tuesday ahead of what is expected to be an exceptionally close US presidential election, after rising more than 2 percent in the previous session as OPEC+ delayed plans to hike production in December.
Brent crude futures ticked down 3 cents, or 0.04 percent, to $75.05 a barrel by 9:00 a.m. Saudi time, while US West Texas Intermediate crude was at $71.43 a barrel, down 4 cents, or 0.06 percent.
“We are now in the calm before the storm,” IG market analyst Tony Sycamore said.
Oil prices were supported by Sunday’s announcement from OPEC and their allies, a group known as OPEC+, to push back a production hike by a month from December as weak demand and rising non-OPEC supply depress markets.
Still, risk-taking remains limited with a busy week — including the US election, the Federal Reserve’s policy meeting, and China’s National People’s Congress meeting — keeping many traders on the sidelines, said Yeap Jun Rong, market strategist at IG.
For now, polls suggest the US presidential race will be closely contested, and any delay in election results or even disputes could pose near-term risks for broader markets or drag on them for longer, added Yeap.
“Eyes are also on China’s NPC meeting for any clarity on fiscal stimulus to uplift the country’s demand outlook, but we are unlikely to see any strong commitment before the US presidential results, and that will continue to keep oil prices in a near-term waiting game,” Yeap said.
Meanwhile, OPEC oil output rebounded in October as Libya resumed output, a Reuters survey found, although a further Iraqi effort to meet its cuts pledged to the wider OPEC+ alliance limited the gain.
More oil could come from OPEC producer Iran as Tehran has approved a plan to increase output by 250,000 barrels per day, the oil ministry’s news website Shana reported on Monday.
In the US, a late season tropical storm predicted to intensify into a category 2 hurricane in the Gulf of Mexico this week could reduce oil production by about 4 million barrels, researchers said.
“Technically, crude oil needs to rebound above resistance at $71.50/72.50 to negate the downside risks,” IG’s Sycamore said, referring to WTI prices.
“All of which suggests there won’t be a scramble to chase it higher in the short term.”
Ahead of US weekly oil data on Wednesday, a preliminary Reuters poll showed on Monday that US crude stockpiles likely rose last week, while distillate and gasoline inventories fell.
Business activities strengthen in UAE, Kuwait and Qatar: S&P Global
RIYADH: Non-oil business activity in the UAE continued its momentum in October, with the Emirates’ Purchasing Managers’ Index reaching 54.1, up from 53.8 in the previous month, an economy tracker showed.
According to the latest PMI report compiled by S&P Global, the rise in the index was driven by a faster increase in business activity, as demand rose and firms maintained efforts to contain backlogs.
Aligned with the economic diversification efforts of its Arab neighbors, the UAE is also reducing its reliance on crude revenues and is concentrating more on sectors such as tourism.
“The main factor keeping the PMI above its previous reading was an expansion in business activity, which accelerated notably, albeit from September’s three-year low,” said David Owen, senior economist at S&P Global Market Intelligence.
According to the agency, the pace of business activity levels in October improved at its quickest rate since April, as firms raised output in response to higher sales volumes, healthy work pipelines and robust client numbers.
However, the growth of new orders softened to its lowest since February 2023, which contributed to both weaker job creation and a renewed drop in selling charges.
“A softening of new business growth in October added to signs that the non-oil economy is losing strength after a robust growth period in late-2023/early-2024. Firms in the survey panel frequently indicated that crowding in the market was eating into sales, and hitting job creation which slipped to a 30-month low,” said Owen.
He added: “Firms reduced their output prices for the first time in six months in a bid to try and reverse this slowing sales trend. Positively, this came at the same time as input price pressures softened, likewise to a six-month low.”
The report revealed that the intakes of new work increased in October, but the rate of growth dropped to its weakest level in 20 months.
According to the survey, business sentiment improved following September’s 18-month low, yet remained at one of its weakest levels in 2024 so far.
The report added that companies were generally hopeful that activity and demand growth would be resilient in the future, in part supported by strong sales pipelines. Conversely, uncertainty and high competition were both noted as headwinds to growth by non-oil firms in the UAE.
Dubai PMI slightly edges down
In the same report, S&P Global revealed that non-oil companies in Dubai registered a slower improvement in operating conditions during October with the PMI falling to 53.2, down from 54.1 in September.
According to the survey, new business intakes in Dubai rose at the softest rate since the beginning of 2022, as a number of firms cited tougher market conditions and increased numbers of competitors.
S&P Global added that the pace of employment growth also ticked down in October, but output growth accelerated slightly to a five-month high.
Similar to the overall scenario in the UAE, non-oil firms in Dubai also posted a drop in average selling prices for the first time since April, due to strong competition.
Kuwait’s non-oil sector regains momentum
In another report, S&P Global revealed that the non-oil sector in Kuwait regained momentum, with the PMI rising to 52.7 in October, up from 50.3 in September to reach its highest level in seven months.
According to the survey, both output and new orders rose in the 10th month of the year, while companies also ramped up purchasing activity.
The report added that advertising and competitive pricing were the main factors outlined by survey respondents which drove the growth of new orders.
“October saw a rejuvenation of the Kuwaiti non-oil private sector, with firms much better able to bring in new business during the month and therefore seeing output growth quicken,” said Andrew Harker, economics director at S&P Global Market Intelligence.
He added: “The latest figures raise hopes that the recent soft-patch is behind us and that growth will continue over the remainder of the year. Adding to this sense of positivity, business confidence continued to strengthen.”
While companies increased their purchasing activity rapidly, the pace of job creation remained only fractional in October, as most of the firms embraced this tactic to save costs.
“Less positive was that firms are still often displaying a reluctance to hire additional staff as they attempt to limit costs. A renewed increase in backlogs of work, however, might mean that workforce numbers are raised more quickly in the months ahead,” said Harker.
Non-energy private sector growth strengthens in Qatar
In a report compiled by S&P Global, Qatar Financial Center said that the country’s PMI rose to 52.8 in October from 51.7 in September, signaling stronger overall growth in business conditions in the non-energy private sector economy.
According to the survey, demand for goods and services increased at a faster rate last month, leading to growth in total activity and the greatest build-up of outstanding business in over two years.
“The headline PMI rose to 52.8 in October, taking it above the average for the third quarter (52.0) and signaling renewed momentum in the non-energy sector. New business growth accelerated, driving total activity higher and leading to a faster build-up in outstanding work,” said Yousuf Mohamed Al-Jaida, CEO of QFC Authority.
The report added that companies continued to invest in staff in October to boost capacity.
Confidence regarding the next 12 months remained strong in October, with sentiment the second highest since early 2023, driven by multiple factors, including market conditions, population growth, and real estate investment, as well as new products and tourism.
“The employment and staff costs sub-indices remained close to September’s record highs as firms reported hiking salaries to boost capacity and retain skilled and experienced staff. However, higher staff costs have not been passed on to customers as prices charged fell further in October,” added Al-Jaida.
Egypt’s non-oil business activity declines
In a report focusing on Egypt, S&P Global said that business activities among non-oil private sector firms declined in October, with the country’s PMI standing at 49, slightly higher than 48.8 in September.
According to the US-based agency, any PMI reading above 50 indicates expansion of business operations, while readings below 50 signify contraction.
The survey revealed that strong cost pressures led to another increase in overall selling prices in October, which dampened new order volumes.
“The decline in non-oil private sector conditions extended into October, with firms showing that price pressures had continued to restrain the sector from returning to growth territory,” said Owen.
He added: “Furthermore, this contraction was observed in all sectors covered by the survey, especially in construction where rising material costs appeared to hit total activity.”
According to S&P Global, business activity dropped for the second month in a row in October, following August’s brief expansion, which was the first seen in three years.
The survey revealed that the downturn was relatively widespread, with the most pronounced cuts in activity and sales seen among construction firms.
Regarding future outlook, non-oil private sector firms in Egypt projected business activity to rise in the coming 12 months.
“With the PMI at 49 in October, Egypt’s non-oil economy is not too far from growing again, and a lessening of cost pressures in the latest month provides some hope that economic headwinds could ease,” Owen added.
