As coronavirus worsens, Tesla furloughs NY workforce, cuts salaries

The coronavirus pandemic has forced Tesla to suspend vehicle production

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Most of Tesla's Buffalo, N.Y., workforce is being temporarily laid off starting April 13, local news outlet WGRZ reported citing a letter sent to state and local officials.

The decision comes as the novel coronavirus pandemic, which has forced Tesla to suspend vehicle production, continues to peak throughout the country and in New York, which has been hit hardest by the virus in the United States.

"As you know, Tesla has been keeping only minimum critical operations running over the past couple weeks," the letter to New York officials read, according to WGRZ.

 Tesla factory Sparks Nevada / iStock

The letter said the automaker would be temporarily laying off most of its Buffalo workers but did not give a specific number. Maintenance staff and workers who are able to work from home will not be furloughed, and all employees will still have health care benefits, WGRZ reported.

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It is unclear whether Tesla's Buffalo employees have anything to do with ventilator production at the temporarily closed auto factory.

The letter to New York officials comes after the automaker's head of North American HR, Valerie Workman, sent an internal email Tuesday that said the company is furloughing its nonessential, hourly workers at its plants throughout the country and cutting pay for salaried workers until May 4, as CNBC first reported.

"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,"  Workman wrote in the email obtained by CNBC. "Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans."

An employee works on a Telsa Motor Inc. Model S sedan as it makes its way along an assembly line at company's assembly plant in Fremont, California. Photographer: Noah Berger/Bloomberg via Getty Images

She added that the company's vice presidents will be receiving 30-percent pay cuts, directors will get 20-percent cuts and "everyone else" will receive 10-percent pay cuts.

Workman also wrote that all employees not working from home will be furloughed, which means they will not be paid but will remain Tesla employees and will receive normal healthcare benefits. Workers "will not report to work until the furlough ends" and are "directed to return by management" around May 4.

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Unemployment benefits will "be roughly equivalent to normal take-home pay," Workman said.

The Palo Alto, Calif., company delivered 88,400 vehicles during the first three months of the 2020, based on preliminary numbers released April 2.

A 2019 red Tesla Model 3 plug-in electric car parked on a city street in downtown Halifax. / iStock

That represented a 40-percent increase from the same time last year and came close to matching the average sales estimate of 89,000 vehicles among analysts polled by FactSet. Those projections had fallen from estimated sales of 107,000 Tesla vehicles when FactSet surveyed analysts at the end of February.

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Investors apparently had been bracing for a letdown amid the economic turmoil triggered by the health crisis that has already killed more than 50,000 people worldwide while infecting more than 1 million. Wedbush Securities analyst Daniel Ives described Tesla's sales numbers as “a small victory in a dark environment."

Tesla's stock surged nearly 17 percent to $531 last week in extended trading after the first-quarter sales figures came out. Even so, Tesla's stock has lost nearly half its value since peaking nearly two months ago amid rising hopes that the company's cars were on the verge of making the leap from the luxury to mainstream market.

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The Associated Press contributed to this report.