Tesla Plans To Resume EVs Production May 4th

At its factories in U.S. Tesla stopped production on March 23, and seeks to resume operation from May 4.

In a letter sent to the employees, it was announced that Tesla U.S. was planning to start a normal work schedule starting from May 4, if there were no additional circumstances.

"While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our US facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans. "

The resumption of production is good news for investors who are worried about the consequences of COVID-19.

Also, along with other U.S. companies, Tesla announced a reduction in salaries and the dismissal of employees with hourly wages until May 4. For Tesla U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else. For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.

Employees who cannot work at home or who perform non-critical work will be fired at this time. In the coming days, they will receive notifications with instructions on how to apply for unemployment benefits. For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay. A wage reduction in a given situation is better than a total loss of work.

These people still remain Tesla employees and retain their medical benefits, which is a very important point.

Wage cuts and layoffs are not surprising given the state of the industry. Like Tesla, General Motors (GM), Ford Motor (F) and Fiat Chrysler Automobiles (FCAU) ceased production. But there is hope that the automotive industry will begin to recover in early May.

Fiat and Honda Motor (HMC) discussed the same date that Tesla indicated in a letter to their employees. Ford, for its part, said European operations would not be available until “at least May 4.”

In the U.S., car sales fell by more than 30% in March, and a more serious decline is expected in April. Analysts express their concern about the failure of funds and the liquidity of factories. According to Barron's, Deutsche Bank analyst Emmanuel Rosner, believes Ford and GM have about three months of cushion.

At the same time, Credit Suisse analyst Dan Levy recently said Tesla had enough liquidity to deal with the slowdown of COVID-19. Tesla ended the year with about $6.3 billion in cash on its balance sheet. And in early 2020, the company raised another $2.3 billion.

Loup Ventures managing partner Gene Munster has the same point of view after evaluating the company capabilities. He states in his note to clients that Tesla is able to withstand several quarters of a stop because Tesla's balance sheet is strong enough.