A few days after Tesla announced a furlough campaign in an email dated April 7, the electric car-maker has started the process by letting go off sales and delivery staff for a while. As part of this process, Tesla announced salary cuts and reductions for its staff- signals of declining business amid the coronavirus outbreak.
The classification of who stays and who goes is apparently being done on experience basis. Tech publication TechCrunch reports that it has been in talks with several employees of the company who stated that performance is not the pivoting factor for the furlough process. Instead, employees(sales and delivery) who have been at the company for less than 2 years will be furloughed, according to the corporate calls these employees received from the company. However, those receiving these furloughs can avail unemployment benefits, according to the email.
Starting from April 13, salaried employees will see a 10% to 30% cut in their salaries, depending on their position in the company. The cut will be applied to employees who cannot work from home and have not been assigned critical onsite positions. This cut is expected to stay in place till the end of second quarter, according to TechCrunch which read a copy of that email. Employees holding director and vice president-level roles and above will see pay reductions of 20% to 30%, and “everyone else” will receive a pay cut of 10%.
Tesla wanted to keep its shutters open before the coronavirus spread as rampantly as it has in US. The company had a very optimistic outlook for 2020, and had to be instructed to close off operations by the local authorities, several times. Tesla and its CEO Elon Musk kept trying to find loopholes to stay on track to its earlier prediction of 36% growth in delivery. Despite America’s worsening condition and deliveries being hampered, customers were still reporting deliveries in California, New York and other states.
The aforementioned email, which was composed by Tesla’s head of human resources Valerie Workman, included a premonition about a cut in salaries. It also informed employees about a halt in production at all US facilities of Tesla till at least May 4 due to the COVID-19 pandemic. The whole email foreshadowed Tesla’s need to cut losses in this period of lockdown.
Tesla has reported minimum operations at the moment, and a return to full operations by early May, “barring any significant changes”, said CNN.
The company’s performance is expected to plummet this year after 3 consecutive profitable quarters.
