According to sources, Tesla Inc. will shell out 30 per cent reduced salary to its workers, with effect from Monday, April 13. The decision is based on the fact that some operations had to be shut down in the wake of the coronavirus pandemic. In the US, the salary cut will be 30 per cent for vice presidents and above, 20 per cent for directors and above, and 10 per cent for others, according to an internal memo seen by Bloomberg.
Employees who haven’t been assigned critical tasks or cannot work from home will be furloughed without pay, though they will still receive health-care benefits.
“This is a shared sacrifice across the Company that will allow us to progress during these challenging times,” said the Company in the memo.
The electric-vehicle maker expects to resume normal production at its US facilities on May 4.
Even after re-opening its facilities, Tesla will probably need about two weeks to ramp up production again, according to analysts at Credit Suisse Group AG. Tesla had about 30,000 cars in inventory at the end of the first quarter, which was sufficient to meet the weakened demand.
The Company, which has about 56,000 employees, will put all wage adjustments and equity grants on hold. Reports say that the pay cuts are expected to last until the end of the second quarter and those furloughed are likely to be asked to return on May 4.
At its Nevada gigafactory, Tesla is reducing on-site staff by 75 per cent, according to the county where the plant is located. The facility produces battery packs and electric motors with partner, Panasonic Corp.
Tesla’s Shanghai plant, meanwhile, recovered from a virus-related shutdown faster than many in the industry, helped by aid from local authorities. After resuming operations in February, the factory — Tesla’s onlyone outside the US — surpassed the capacity it had before the shutdown, reaching a weekly production of 3,000 cars, the Company had said last month. Tesla is also planning to expand its lineup in China by introducing a locally built Model 3 sedan, with a longer driving range from as early as this week, people familiar with the matter have said.