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Leaked email: Tesla to furlough workers and cut pay amid coronavirus shutdowns

The company said it expects to resume normal operations May 4, "barring any significant changes."

Tesla factory

Tesla's vehicle factory in Fremont.

Photo: Lauren Hepler/Protocol

Tesla will reduce salaries and furlough nonessential employees who are unable to work remotely until the automaker can reopen factories shuttered by coronavirus lockdowns, according to an email sent to employees late Tuesday.

The email, provided to Protocol by two workers at the company's Fremont factory, said the company will begin furloughs on Monday and expects to resume normal production at U.S. facilities on May 4, "barring any significant changes." Furloughed workers will retain their health care benefits in the meantime, according to the email from North American HR leader Valerie Capers Workman.

In what the email called "a shared sacrifice across the company," Tesla will also temporarily reduce pay for all salaried employees through the second quarter of the year, the email said. Executives at the vice president level and above will see a pay cut of 30%, directors and above will see a 20% cut, and "everyone else" will be docked 10%. The company will also pause its merit review cycle, pay raises and stock grants.

"Definitely surprised by it," one manufacturing worker told Protocol. "We didn't think they were going to furlough full-time employees," he added, following reports that Tesla had laid off hundreds of contractors in recent days.

In the coming days, the company said, it will inform employees of options to apply for unemployment benefits expected to "roughly equal" normal pay for many workers. "We know the uncertainty has not been easy," Capers Workman wrote, "and we are doing everything we can to keep you safe and informed while also navigating the changes around the world."

Tesla did not immediately respond to requests for comment, but the cuts come amid a push to ramp up production of the new Model Y and expand the company's 10,000-person Silicon Valley manufacturing hub.

Tesla stock rose more than 5% in trading Tuesday amid a broader rally for the auto industry, and after a Bloomberg report that the company planned to sell its Model 3 sedan in China with a longer driving range. Still, the electric automaker's $545 share price was down more than 40% from a high reached in mid-February.

During the coronavirus crisis, Tesla has pushed the limits of operations for businesses in emergency zones. The automaker initially refused to shut down its Fremont factory after a March 17 shelter in place order from local governments.

Multiple factory workers told Protocol at the time that non-supervisors were offered flimsy paper masks, and they worried about the spread of the virus with manufacturing stations only a few feet apart. Though the company told workers they could work from home if they felt unsafe, some said that was not financially possible due to a lack of remaining paid sick days or vacation days.

On March 24, Tesla reduced its operations to essential factory personnel in both Fremont and Buffalo, New York, while corporate employees who were able worked remotely.

According to emails released to Protocol last week, Tesla initially argued to Fremont city officials that it believed it could stay open because it was covered by federal and state guidance on "critical infrastructure," rather than local emergency orders.

While the number of employees still working at the Fremont factory has not been released, the company said it planned to transition to "minimum basic operations" to support vehicle and energy service operations, as well as charging infrastructure.

One employee who does critical work at the plant, who asked to remain anonymous to protect their job, said they have been working 10-hour days from Monday to Saturday. While there have been promises of incentives for the extra hours, they have not materialized, the worker told Protocol.

Tesla has not responded to repeated requests for comment since the shelter in place order was issued. In the meantime, CEO Elon Musk has remained active on Twitter, first questioning the "dumb" virus panic, then promising to help provide ventilators to overwhelmed hospitals.

Levi Sumagaysay contributed reporting.

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