In the US, those classified as vice presidents or above will see the steepest pay cuts, followed by a 20% cut for directors and 10% for everyone else, according to an internal memo seen by Bloomberg. Workers outside the United States will see similar reductions. With the exception of assigned critical tasks, employees who cannot work from home will be suspended without pay, although they will retain health care benefits.
The move adds to the growing number of companies cutting labor costs to weather the pandemic. The outbreak came just as Tesla was ramping up production of its Model Y crossover, accelerating production at its new Shanghai plant, and moving forward with plans to build a new facility near Berlin.
Tesla agreed to suspend US production last month after officials ordered it to do so. According to the memo, the electric vehicle manufacturer expects to resume normal production at its US facility on May 4.
Analysts at Credit Suisse Group AG said in a note that despite the reopening of its facilities, Tesla would need about two weeks to increase production again. Tesla had about 30,000 cars in inventory at the end of the first quarter, enough to meet weak demand, analysts wrote.
The company has about 56,000 employees, according to a recent email from the company. Its only car manufacturing plant in the US is in Fremont, California, where current stay-at-home orders run through May 3.
Salary adjustments and capital grants will be suspended, according to the memo. The pay cuts are expected to last until the end of the second quarter and graduates are likely to be asked to return on May 4, Tesla told employees.
At its Nevada gigafactory, Tesla is reducing staff at the site by 75%, depending on the county where the plant is located. The facility produces battery packs and electric motors with its partner Panasonic Corp.
Meanwhile, Tesla plant in Shanghai with the help of local authorities recovered from the virus-related closure faster than many in the industry. After resuming operations in February, the factory, Tesla’s only outside the United States, exceeded capacity before closing, reaching weekly production of 3,000 cars, the company said last month. Tesla plans to expand its lineup in China by introducing a locally-built Model 3 sedan with a longer driving range starting this week, people familiar with the matter said.
Though below the February peak, Tesla shares are still up 30% this year.
