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Tesla will cut pay for its employees and furlough hourly workers after health orders to curb COVID-19 have forced it to suspend new vehicle production. TSLA stock is in the green.
Tesla Inc (NASDAQ: TSLA) told its workers that it is cutting pay and furloughing employees who aren’t assigned to critical work or cannot work from home, a leaked email from regional human resources head Valerie Capers Workman revealed. The measures will be implemented as of April 13.
The company also noted that all reductions will be in place until the end of the second quarter. Vice Presidents and above will see their pay reduced by 30%, directors and above by 20%, while everyone else will have a 10% reduction in salary.
However, yesterday TSLA stock jumped by more than 5% as the automaker revealed its plans to begin offering a longer-range version of its China-made Model 3 for its customers in that country. This new version of the Model 3 could launch as early as this week.
Tesla to Dismiss Workers from U.S. Factories
Last week, the company announced it will dismiss contractors from its car and battery plants in Fremont, California and in Reno, Nevada. Sources then said that these cuts affect hundreds of people, most of them being still temporary workers at Tesla. Allegedly, they’ve got the memo recently from one of the agencies, Balance Staffing, that says:
“It is with my deepest regret that I must inform you that the Tesla factory shutdown has been extended due to the COVID-19 pandemic, and as a result, Tesla has requested to end all contract assignments effective immediately.”
The staffing agency pledged that workers would still be Balance Staffing employees and will be able to find other work through their business. Contractors hired through other temp agencies reportedly got the same notice.
Last month the company announced that it will temporarily halt production at its Bay Area factory in California as of the end of the working day on March 23 over the coronavirus outbreak. A factory in New York will also temporarily cease production. However, both plants will continue with “basic operations.”
The decision comes after Tesla initially decided to keep the Fremont plant open despite a shelter-in-place order in the Bay Area. Authorities said the factory wasn’t an “essential business” and the electric carmaker could have faced a misdemeanor charge had it decided to remain open.
Ignoring Functional Safety Is Bad Business, Tesla (TSLA) Stock Moves Up
It is more than obvious that Tesla has successfully gathered rapid feedback on business and engineering assumptions. However, there are also some failures the company made. For example, if we take a look at Tesla’s Safety Of The Intended Functionality (SOTIF) incidents – it has been the foreseeing misuse of the product in combination with the marketing of an “AutoPilot” functionality. Drivers were finding ways to nap behind the wheel of Autopilot thinking that they need not act as a driver despite warnings. Tesla watchers comment that SOTIF together with Functional Safety requires discipline, and both are complicated standards requiring a set of serial processes to be implemented and documented.
Be it as it may, earlier this week, Jefferies upgraded Tesla (TSLA) stock saying “Tesla is looking like a good deal.”
The firm on upgraded shares of the automaker to “buy” from “hold” while lowering its price target to $650 from $800. That implies a 35% upside from where shares closed at $480 per share on Friday.
Analyst Philippe Houchois called Tesla the only automotive original equipment manufacturer that is legacy-free, engaged in a positive electric-vehicle sum-game, doubling its market coverage with the Model Y, and leading the industry’s technological transformation.
At the moment, Tesla (TSLA) stock is in the green. Yesterday it closed at $545.45 (+5.66 %). The stock closed on $549.87 in after-hours trading. Today in the pre-market TSLA is up 0.65%. The market cap is $100.42 billion.