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Tesla Plans Pay Cuts & Worker Furloughs on Coronavirus Crisis

Tesla, Inc. TSLA will cut pay for all of its salaried employees and furlough hourly workers amid the coronavirus pandemic. The electric vehicle (EV) maker plans to resume production across its U.S. facilities on May 4, per media sources.

Reportedly, salaried employees will see a temporary 10% pay cut, while directors' pay will be reduced by 20% and executives at the level of vice president and above will see a 30% cut. Employees who cannot work from home will be furloughed, though they will be eligible for healthcare benefits. The pay reductions are expected to be in place until the end of the second quarter to deal with the downturn caused by production shutdowns. Wage adjustments and equity grants will also be put on hold due to COVID-19 concerns.

Further, Tesla's main factory in California and the solar-panel factory in New York will be shut until May 3 to curb the spread of the virus. This will affect production ramp-up plans of the Model Y crossover, for which the company had been projecting high demand. However, the New York plant may soon reopen to manufacture ventilator components to combat the deadly virus.

Moreover, the company is also reducing on-site staff by 75% at its Nevada gigafactory, where it produces battery packs and electric motors in partnership with Panasonic Corp. PCRFY. Notably, the number of confirmed coronavirus cases in the United States has crossed 400,000.

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Meanwhile, Tesla currently has $6.3 billion in liquidity, ahead of a recent $2.3-billion capital raise. This is expected to help the company successfully navigate through this extended period of uncertainty. Notably, Tesla managed to carry on with its global deliveries despite the COVID-19 fallout, which is certainly commendable. The company reported production and deliveries of 102,672 and 88,400 vehicles in the first quarter of 2020, reflecting a year-over-year jump of 56.5% and 40.3%, respectively.

Zacks Rank & Stocks to Consider

Tesla currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector are Fox Factory Holding Corp. FOXF and Adient plc ADNT, both carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Buy) Rank stocks here.

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Click to get this free report Tesla, Inc. (TSLA) : Free Stock Analysis Report Panasonic Corp. (PCRFY) : Free Stock Analysis Report Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report Adient PLC (ADNT) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research