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Tesla Furloughs All Non-Essential Workers In The US, Others To Get Pay Cut

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Tesla Furloughs All Non-Essential Workers In The US, Others To Get Pay Cut

Tesla Inc. (NASDAQ: TSLA) is furloughing all employees in the United States who aren't assigned "critical work onsite" or can't work from home, according to an internal email accessed by CNBC.

What Happened

The furlough will start on Monday and last until at least May 4, when Tesla expects to "resume normal production," the company's Head of Human Resources for North America Valerie Workman said in the email, reported by CNBC.

The automaker's furloughed employees will continue to receive healthcare benefits, but no pay from the company.

"For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay," Workman said.

In addition, all employees across the company will take temporary pay cuts that are expected to last until at least the end of June.

Vice presidents and above ranks will take a 30% cut in their salaries, directors and above 20%, and everyone else will see their pay reduced 10% temporarily.

"This is a shared sacrifice across the company that will allow us to progress during these challenging times," Workman noted, according to CNBC.

Why It Matters

Tesla had to shut down production at Fremont and New York manufacturing facilities after local authorities imposed shelter in place orders that required all non-essential businesses to shut down.

The automaker also reduced three-fourth of its staff at the Nevada gigafactory.

The Elon Musk-led company can only maintain "minimum basic operations" at its factories during the novel coronavirus (COVID-19) pandemic.

Tesla hasn't updated its expectations for the financial year 2020, over the previous guidance of 500,000 deliveries in the year, despite the pandemic.

The Palo Alto-based company reported 88,400 deliveries in the first quarter of this year, beating analyst estimates.

Loup Ventures Managing Partner Gene Munster noted earlier that Tesla is likely to miss the year's guidance, but its numbers compared to other automakers will be a better judge of its performance.

Price Action

Tesla shares closed 5.7% higher at $545.45 on Tuesday. The shares traded another 0.8% higher in the after-hours session at $549.87.

 

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