Tesla Furloughs Employees Due To “Very Few New Orders” And A “Drop In Demand”

The “dumb” coronavirus panic, as Elon Musk once called it, is finally coming back to bite Musk in the ass.

After a report yesterday that several Tesla employees had tested positive for coronavirus, possibly as a result of Elon Musk keeping his Fremont factory open far longer than he should have, Tesla has only now started to furlough some workers due to a “drop in demand” amid the national crisis. 

Axel Tangen, Tesla’s director of Northern Europe, to employees in Norway stated in an e-mail released by electrek yesterday:

In plain terms, our current capacity is higher than the actual work available to us, due to uncertainty and restrictions caused by the coronavirus outbreak. Sadly, this means that our staffing need will be lower than normal for some time to come. We are confident that this trend will reverse as the outbreak is contained and Norwegians return to their daily lives, but we need to take action to ensure there is a place to work for us all when things return to normal.

He also said that layoffs would begin in April:

We will talk individually with the employees affected by the layoff. Initially, they will be laid off for the month of April. The employee and safety representatives will meet with management on a weekly basis to evaluate the current situation.

“Tesla will decide which employees will be furloughed based on the necessity of their role, the amount of time they’ve worked for the company, and particularly compelling social conditions,” he continued. 

Recall, we highlighted yesterday how auto sales in the United States were plunging. Looking at a recent business update from Group 1 automotive, a company that owns and operates 186 auto dealerships along with 242 franchises and 49 collision centers, gave us insight into the collapse of the overall broader auto market. 

As a result of the coronavirus lockdown and beginning on March 6, the company said that overall U.S. vehicle sales volumes began to significantly decrease, and are currently down 50-70 percent from normal expected March volumes. Additionally, the company said that based on discussions with its OEM partners, this sales decline is consistent with that experienced by other dealers.

“Virtually all of Group 1’s U.S. dealerships are located in markets operating in some type of ‘shelter in place’ or restricted travel environments in accordance with applicable state and local orders,” the company said in its release. 

Tesla is, of course, also at the epicenter of a state that is supposed to be on lockdown. Additionally, many Tesla stores that were located in malls have had to be shut down over the past few weeks.

No matter how much Elon Musk tries to dance around it, it looks like reality may finally be hitting his business. Even electrek wrote that its sources told it Tesla is “seeing very few new orders and a lot of cancellation[s] over the last few weeks.”