Tesla furloughs hit half of US sales and delivery employees

A Tesla sales and service center is shown in Costa Mesa, California, U.S. June 28, 2018. 

Mike Blake | Reuters

Tesla managers told groups of employees on Friday that the company’s furloughs would impact around half of its U.S. sales and delivery staff, according to three people who work for the company in different states. 

These people requested anonymity because they were not authorized to speak with press. A Tesla spokesperson did not respond to a request for comment.

Tesla revealed its plans to furlough all but essential hourly workers, and to cut salaried employee pay, in an e-mail to employees on Tuesday. The decision was driven by a global pandemic that has forced CEO Elon Musk’s electric car venture to temporarily halt production at its main U.S. car plant in California. Tesla told employees it expects to resume car production on May 4, although there has been no indication from officials in California that nonessential businesses will be allowed to reopen by then.

Workers in sales and delivery have been furloughed by rank and tenure, not on the basis of performance, according to the employees. Those with entry-level roles, or who have lower sales quotas each quarter, are all furloughed, they said, along with employees in more senior sales and delivery roles who have been with the company for less than two years.

One furloughed employee said they worry that permanent layoffs will follow the furloughs, as a continuation of an effort Tesla began in early 2019 to cut costs and ditch its brick-and-mortar stores. However, they are hopeful that they will be able to return to Tesla after the pandemic is sufficiently contained.

In February 2019, Musk caused a stir when he said the company would shift to online-only sales. But by March 2019, he backpedaled, and said that “stores with a high visitation rate and that lead to significant sales” would not be closed.

The COVID-19 pandemic has forced auto dealers to try to adopt Tesla’s methods of selling cars online, as much as possible, rather than at dealerships.

But even with a strong e-commerce game, electric vehicle sales face a steep challenge this year due to the Covid-19 outbreak and response, as well as uncertainty and pricing battles in oil markets.

According to new estimates from Wood Mackenzie, global EV sales hit 2.2 million in 2019, and that number is expected to drop 43% to 1.3 million by the end of 2020.