Tesla abandons employees and cuts employee wages due to coronavirus


April 7 (Reuters) – Tesla Inc. told employees Tuesday that it will remove all non-essential workers and implement pay cuts when it closes its production facilities in the United States because of the coronavirus epidemic.

The Tesla logo is visible at a branch in Bern, Switzerland, March 25, 2020. REUTERS / Arnd Wiegmann

© Arnd Wiegmann / REUTERS
The Tesla logo is visible at a branch in Bern, Switzerland, March 25, 2020. REUTERS / Arnd Wiegmann

Tesla has said it plans to resume normal operations on May 4, unless there is a material change, according to an email sent to US employees by internal lawyer Valerie Capers Workman, who was consulted by Reuters.


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The company, which suspended production at its San Francisco Bay vehicle and New York solar tile factories on March 24, said in the email that the decisions were part of a larger effort by cost management and implementation of long-term plans.

Tesla did not immediately respond to a request for comment.

The coronavirus pandemic has reduced American demand for cars and forced several other automakers to lay off American workers.

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Compensation for Tesla workers will be cut from April 13 and the cuts will remain in effect until the end of the second quarter, the email said.

In the United States, workers ‘wages will be cut by 10%, directors’ wages by 20% and vice-president’s wages by 30%. Comparable reductions will be implemented abroad.

Employees who cannot work from home and who have not been assigned to critical on-site factories will be put on leave, workers retaining health benefits until production resumes, said E-mail.

Tesla suspended production at the two plants last month after ending a confrontation with authorities concerned about the spread of the coronavirus.

Tesla’s only U.S. auto plant employs more than 10,000 workers, with annualized production of just over 415,000 units at the end of December 2019.

The suspension interrupts a planned acceleration of production of its model Y sport utility vehicle at the factory. Demand for Model Y is expected to be higher than for all other Tesla models combined, said general manager Elon Musk in the past. The Y model has a strong demand for SUVs and is much cheaper than the high-end X model.

Tesla said on March 20 that it believed it had enough cash to successfully weather the long period of uncertainty, with some $ 6.3 billion in cash at the end of the third quarter, before a recent capital increase of $ 2.3 billion.

The company surprised investors with good first quarter delivery figures on Thursday despite the coronavirus outbreak that has dampened car sales nationwide and said production of the Model Y is ahead of schedule .

(Reporting by Tina Bellon in New York; Editing by Jane Wardell)


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