Tesla CEO Elon Musk at the Satellite 2020 Conference in Washington, D.C.,
Tesla wants to restart production at its main California plant by May 4 but ahead of that is implementing across-the-board pay cuts for all employees as well as furloughs that will hit thousands of factory workers as Elon Musk’s electric-car company remains idle in the U.S. because of the COVID-19 pandemic.
The Silicon Valley-based carmaker notified staff of the moves late Tuesday in an email from Tesla HR official Valerie Workman that was obtained by Forbes. Starting April 13, employees at the vice president level and above will see pay cuts of 30% while directors and higher will have 20% salary reductions. Pay for all other U.S. employees is to be reduced by 10%, Workman said in the message. Similar cuts are planned for overseas staff. Pay reductions “are expected to be in place until the end of Q2,” she said.
“This is a shared sacrifice across the company that will allow us to progress during these challenging times,” she said.
Furloughs are also planned for employees “who cannot work at home and have not been assigned to critical work onsite,” she said. That’s likely to affect most of the more than 10,000 workers at Tesla’s Fremont, California, assembly plant that builds electric Model 3 and S sedans and Model X and Y crossovers, as well as many employees at the company’s Buffalo, New York, solar plant factory. Furloughed workers won’t receive any pay, but health benefits will continue. The layoffs start April 13 and could end as early as May 4, assuming work resumes at U.S. factories by that time.
“A furlough notice will be emailed to you in the coming days with additional instructions on how to apply for unemployment benefits through your state agency,” Workman said.
Tesla didn’t respond to a request for comment.
The steps are the first of their kind for Tesla and come as auto manufacturing in the U.S. sits dormant during the most dramatic public health crisis in over a century. The move is also a big shift from Tesla’s April 2 announcement of better-than-expected first-quarter delivery and production results that beat analysts’ expectations. At that time Musk and the company gave no hint that pay cuts and furloughs were in the works. The company’s billionaire CEO will likely elaborate on the moves when Tesla releases first-quarter final results in the next few weeks.
Shares of Tesla jumped on April 3 after the first-quarter figures came out, though in retrospect it seems some investors weren’t considering that the brunt of the coronavirus on the carmaker’s operations wouldn’t be felt until the second quarter. The figures may have been boosted by the fact that Musk delayed halting U.S. production of electric cars until March 23, days after local officials pushed Tesla to suspend regular operations to keep employees safe from COVID-19.
Shares of Tesla rose nearly 6% to $545.45 in regular Nasdaq
