Tesla set to furlough workers and cut salaries

  • Tesla set to furlough workers and cut salaries

Tesla set to furlough workers and cut salaries

The good news is that the company plans to resume production in the USA on May 4 (gradually of course).

Tesla plans to furlough non-essential workers and cut employees' salaries now that the coronavirus crisis has halted production at some of its factories.

Tesla did not immediately respond to a request for comment.

Tesla workers' pay in the United States will be cut by 10 percent, while directors will receive a 20 percent cut. Comparable reductions will be implemented overseas.

Employees who can not work from home and have not been assigned to critical work onsite factories will be furloughed, with workers maintaining their healthcare benefits until production resumes, the email said.

The suspension interrupts a planned ramp-up in production of its Model Y sport utility vehicle at the factory.

Tesla suspended production at both factories last month after it ended a standoff with authorities concerned about the spread of the coronavirus.

Even after re-opening its facilities, Tesla will probably need about two weeks to ramp up production again, analysts at Credit Suisse Group AG said in a note. Tesla had about 30,000 cars in inventory at the end of the first quarter, which is sufficient to meet demand that has weakened, the analysts said.

That's according to an email sent by the company's in-house lawyers which was seen by Reuters. Its sole USA vehicle production facility is in Fremont, California, where current stay-at-home orders extend until May 3.

According to Bloomberg, who obtained an internal memo, Tesla will temporarily cut pay and send some of the employees on furlough as the production sites in the USA remain basically idle.

Wage adjustments and equity grants will be put on hold, according to the memo.

But for now, pay for salaried Tesla employees will be reduced starting April 13, and cuts will remain in place until the end of the second quarter.

At its Nevada gigafactory, Tesla is reducing on-site staff by 75 per cent, according to the county where the plant is located.

Though down from a February peak, shares of Tesla are still up 30 per cent this year.