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Tesla announces pay cuts, furloughs, and aims to get back to production by May 4

In an email to employees leaked to Electrek today, Tesla is announcing pay cuts and furloughs while it also says that it plans to resume production by May 4.

Due to the shelter-in-place order in the Bay Area, Tesla had to shut down Fremont factory two weeks ago.

Tesla’s stores in many markets have also closed, and demand has fallen due to the economic downturn triggered by the coronavirus pandemic.

Until now, Tesla has been waiting on announcing companywide pay cuts and furloughs, but like many other companies, the automaker is now being forced to implement several cost-cutting measures.

Electrek obtained a copy of an email that Valerie Capers Workman, Tesla’s head of HR, sent to all employees today.

In the email, she explained that all salaried employees that can work from home or are assigned “critical roles” are taking a temporary pay cut from 10% to 30% depending on their level in Tesla’s payscale.

Employees who can’t work from home or are not considered “essential” will be put on furlough.

Interestingly, Capers Workman says that Tesla expects to resume normal production on May 4:

While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our US facilities on May 4, barring any significant changes.

She doesn’t explain how Tesla came up with the May 4 date, but it is when the local county shelter-in-place order at Fremont factory is set to end.

However, the local government has warned that it could be extended, and it’s also unclear how other shutdown orders could affect Tesla’s supply chain.

Here’s the email in full:

Hi Everyone,

Thank you for your continued commitment to Tesla and our mission during this unprecedented time. We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world.

While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our US facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans. Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.

  • Pay will be temporarily reduced for salaried employees.
  • For US employees, these reductions are 30% for Vice Presidents
    and above, 20% for Directors and above, and 10% for everyone else.
  • For non-US employees, there will also be comparable reductions,
    of which the specifics will be communicated by the local leadership
    team in accordance with local laws and works-councils.
  • These reductions are expected to be in place until the end of Q2.
  • Employees who cannot work at home and have not been assigned
    to critical work onsite will be furloughed.
  • Under furlough, you remain an employee of Tesla (without pay) and
    retain your healthcare benefits. You will not report to work until the
    furlough ends and you are directed to return by management, which we
    expect to be May 4.
  • A furlough notice will be emailed to you in the coming days with
    additional instructions on how to apply for unemployment benefits
    through your state agency.
  • For the vast majority of furloughed employees, unemployment
    benefits will be roughly equivalent to normal take home pay.
  • Certain employees will be assigned to critical functions and
    they will continue to report onsite. Those employees will be
    communicated to directly by their manager or HR partner.

For the merit review cycle:

  • Salary and hourly rate adjustments will be put on hold.
  • Equity grants will be on hold as well.

If you would like to take a voluntary leave of absence, as some have reached out to request, please discuss with your manager and HR partner.

We continue to monitor the situation closely, and our top priority is to ensure the safety of our employees. As usual, for those who are onsite, 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 penalized. For HR-related questions, contact your HR partner or email [redacted].

Thank you all so very much for everything you do to ensure the success of our company.


Valerie Capers Workman  |  North America HR + AU/NZ/JP/KR
Registered In House Counsel

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