Tesla Reveals Cuts In Salaries And Furloughs Amid COVID-19 Outbreak

In an email sent to Tesla employees, the car company has announced pay cuts and furloughs to tackle the effects of COVID-19. After the shelter-in-place order throughout the Bay Area, Tesla shut down its Fremont factory two weeks ago. Alongside this, demand for Tesla products, like the rest of the motor industry, has also plummeted with Tesla stores shutting down across the world.

Tesla has waited to send out information about reductions in salaries and furloughs, but an email has now been sent to employees which explains this. This is the email that was sent from the company’s head of North American HR, Valerie Workman, on Tuesday evening:

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 U.S. 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 U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
  • For non-U.S. 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 [address redacted]

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

Valerie Capers Workman | North America HR+


Registered In-House Counsel

[contact information redacted]

Tesla is one of the few automotive giants who have been able to wait this late before closing its doors fully. Despite this, the majority of its employees being put on furlough will only receive a 10% reduction in salary, with “30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else”.

A number of car companies, such as Ford, General Motors, Nissan, Hyundai and Volkswagen, have also shut down their factories as of last month, long before Tesla. These companies are providing paid leave for all salaried and hourly employees, including its unionised workers.

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