TSLA Tesla Inc

By Tim Higgins 

Tesla Inc. is furloughing workers and cutting salaried employees' pay more than two weeks after it was forced to shut down production of its lone U.S. car assembly factory amid the coronavirus pandemic.

The Silicon Valley electric-car maker, in an email to workers late Tuesday, detailed the cash-saving plan along with its hope to resume vehicle production on May 4 in California -- a day after a local-government shut-down order currently is scheduled to be lifted.

U.S. salaried workers will see their pay temporarily reduced between 10% and 30% depending upon their position, while non-U.S. employees will get comparable reductions, according to the email from Valerie Capers Workman, Tesla's human-resource head in North America. The email was earlier reported by Electrek, an electric-car-enthusiast website.

Tesla didn't respond to a request for comment.

The cutbacks go into effect on Monday. The company is also furloughing employees without pay who can't work from home or who haven't been assigned to critical work. Those workers will still receive their company health-care benefits.

The electric-car maker stopped making vehicles at its Fremont, Calif., factory on March 23 after facing pressure from local authorities to abide by a county-government order to shut businesses deemed nonessential, to allow workers to shelter at home in a bid to stop the spread of Covid-19, the disease caused by the new coronavirus. The order has been extended into early May. Tesla employs about 10,000 workers at the factory.

Tesla on Tuesday followed other global auto makers in making similar cuts to worker pay, as companies try to reduce their cash burn while it is unclear when sales might pick up again.

Nissan Motor Co. and Honda Motor Co., two of Japan's largest car makers, furloughed their U.S. factory workers without pay this week. Nissan said about 10,000 hourly workers in Tennessee and Mississippi would be furloughed until late April, while Honda said its 14,400 factory workers would be furloughed as it extends a production shutdown to May 1.

The entire U.S. auto industry mostly shut down in March, with General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV laying off about 150,000 hourly employees. Those workers have some protection under their United Auto Workers union contract.

The shutdown at Tesla comes as the auto maker was ramping up production of its new Model Y compact sport-utility vehicle, which Chief Executive Elon Musk has said could overtake the Model 3 compact car to be the company's bestseller. Tesla increased first-quarter vehicle deliveries 40%, compared with a year earlier.

Tesla hasn't said how the shutdown might affect its plans to deliver more than 500,000 vehicles this year, which would represent a 36% increase compared with 2019. In March, Tesla stressed that the company has enough cash on hand to weather the economic uncertainty.

Morgan Stanley has estimated Tesla could withstand several months of revenue falling 90%, calculating the company would burn through about $800 million in cash a month.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

April 08, 2020 13:07 ET (17:07 GMT)

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