Tesla Will Furlough All Its ‘Non-Essential’ Employees And Cut Salaries Due To Coronavirus

Automakers are clamping down on spending to weather the uncertainty

In The Wake Of Coronavirus, Tesla Factory Will Remain Open

After news that BMW, Honda and Nissan would place their employees on leave or lay them off, Tesla made a similar announcement Tuesday. The company will furlough all ‘non-essential’ workers and begin salary cuts while its production facilities are shut down due to the coronavirus outbreak.

Reuters viewed an e-mail from in-house counsel Valerie Capers Workman, who said the company aims to restart production on May 4. This latest decision, like automakers, comes as an effort to curtail costs to bolster its long-term plans, such as its upcoming launches. According to the e-mail, pay for salaried Tesla employees will be reduced starting April 13. Those changes will remain in effect through the end of the second quarter, on June 30.

U.S. workers will have their pay cut by 10 percent during the next two and half months. Directors will lose 20 percent of their pay, while vice presidents’ salaries will be cut 30 percent. Reuters also mentioned Tesla would implement similar cuts in other countries as well. Non-essential employees who cannot work from home will be furloughed from Tesla’s factories while production is shut down, and will not receive any pay during that period. However, the e-mail says they will maintain their healthcare benefits until the plants resume operations.

Tesla Fremont, California factory employs more than 10,000 workers, at time of writing. Tesla just started producing the Model Y, the newest model aimed to expand the brand’s appeal far beyond all other Tesla models. On March 20, the company said it did have enough cash on hand to weather the next few months, ahead of a $2.3 billion capital raise.