- A month ago, Elon Musk tweeted that the panic over the novel coronavirus is dumb.
- Now, Tesla is implementing cost-cutting measures.
- Tesla’s shares have also nosedived since Musk’s infamous tweet.
In March, Tesla chief executive Elon Musk downplayed the coronavirus threat and tweeted that the panic over the virus is “dumb.” A month later, the electric vehicle company is scrambling to manage the impact of the pandemic.
Tesla is now forced to place many of its 50,000-strong labor force on unpaid leave. To add insult to injury, Tesla employees will see their salaries slashed by as much as 30%.
I bet the affected employees don’t think that the panic over the coronavirus is dumb.
Tesla Cuts Salaries and Furloughs Workers amid Pandemic
On March 19, the EV maker reiterated that it has a strong cash position to absorb the impact of uncertainty:
Our cash position at the end of Q4 2019 was $6.3B before our recent $2.3B capital raise. We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty.
Not even a month later, Tesla is forced to implement a number of cost-cutting measures due to the impact of coronavirus on the economy.
First, the company announced that employees who are working from home or have received critical tasks will take a 10%-30% temporary salary reduction depending on their pay grade. The head of the company’s HR wrote:
For US employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
Non-U.S. workers will also see similar pay cuts.
Meanwhile, non-essential employees who cannot work from home will be placed on furlough until May 4.
While employees bear the brunt of Tesla’s new policies, Elon Musk’s $2.6 billion compensation is unaffected.