Tesla Reportedly Seeks Rent Reductions after Coronavirus-linked Pay Cuts, Furloughs
Electric carmaker Tesla is reportedly seeking rent reductions from some landlords as it continues to enact money-saving efforts during the global COVID-19 outbreak.
The company confirmed last week some staff would face pay cuts and furloughs until at least May 4 as the firm maintains "minimum critical operations" in its production plants. Now, a letter to some landlords that was obtained by The Wall Street Journal indicates it is also hoping for rent relief.
The letter stated: "The rapid world pandemic that is now affecting our country has led Tesla to make strategic decisions to ensure the company's long term success and growth.
"As a result of the increasing restrictions on our ability to conduct business, we would like to inform you that we will be reducing our monthly rent obligations effective immediately."
It remains unclear which landlords the notice was sent to, and if any rent reduction plans have been finalized.
But the company letter, reportedly sent via email, has asked for further discussion so the firm and landlords can continue to "partner and work together to ensure a continued and mutually beneficial relationship."
Tesla has been contacted for additional comment by Newsweek.
COVID-19, a respiratory disease caused by a novel coronavirus, has spread to at least 582,000 U.S. residents, according to a statistical map maintained by Johns Hopkins University.
The virus, responsible for at least 23,000 U.S. deaths according to the map, has caused companies across all industries to furlough employees and enact cost-saving measures in anticipation of further economic troubles. Tesla, which operates multiple U.S. plants, has been no exception.
Valerie Workman, Tesla's North American HR chief, said in an staff email last Tuesday—published in full by CNBC—that efforts were needed as part of a "shared sacrifice across the company."
The note confirmed any employees who could not work from home and had not been given critical work were being furloughed, while pay would be temporarily cut for salaried employees.
"Under furlough, you remain an employee of Tesla (without pay) and retain 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," Workman's email elaborated. "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."
On March 19, Tesla confirmed production at its factory in Fremont, California, was being temporarily suspended, with only "basic operations" left to maintain some key infrastructure left in place. Its New York factory also stopped the majority of its usual work flow, the company told investors.
Tesla said in the note that it had enough cash reserves to "successfully navigate an extended period of uncertainty" and suggested that it had available credit lines worth approximately $3 billion. Boss Elon Musk has recently turned his attention to the production and distribution of medical ventilators.
