October 1, 2020

Tesla cuts staff pay as coronavirus halts production

Electric car-maker Tesla will reduce staff pay and put non-essential workers on furlough while production of its vehicles is stopped due to coronavirus.

Work at its factory in Fremont, California halted on 23 March.

In a letter to staff, the company said it hoped to resume operations on 4 May, “barring any significant changes”.

Most remaining workers will face a pay cut of 10%, while director pay will be cut by 20% and vice-presidents and above will lose 30% of their salary.

The letter was shared with business news site CNBC.

Furloughing is designed to support firms that have been badly hit by coronavirus, and to prevent mass unemployment. Taxpayers’ money will help temporarily pay the wages of people who can’t do their jobs, to help companies retain them.

What does it mean if I’ve been furloughed?
“As usual, for those who are on site, if you are sick or are uncomfortable coming to work, please contact your manager and stay at home. We respect your decision and you will not be penalised,” said Tesla’s Valerie Capers Workman in the letter.

The pay cut is expected to last until the end of June.

Production at Tesla’s solar panel facility in New York state has also halted.

However, several of the company’s engineers have been working on developing a ventilator using car parts to help those who fall ill with Covid-19.

On Monday, Tesla shared a video of a prototype on YouTube.

Ford and General Motors have also offered to produce ventilators and other hospital supplies.

Furloughed staff will remain contracted to Tesla but will not be paid until 4 May, should the factories reopen at that time.

“For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take-home pay,” Ms Capers Workman said in her letter.

Last week, Tesla told staffing agencies that contract work would be suspended until further notice, and hundreds of temporary workers were dismissed.

Tesla’s facility in California is the company’s only car-making facility in the US, and employs more than 10,000 people.

When it closed in March, chief executive Elon Musk told staff: “I will personally be at work, but that’s just me. Totally OK if you want to stay home for any reason.”

The company originally planned to “comfortably exceed” 500,000 vehicle deliveries in 2020 and has not changed its guidance for investors.

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