Teslas layoff agreement revealed that compensation for at least two months is not allowed to belittle the company

 Teslas layoff agreement revealed that compensation for at least two months is not allowed to belittle the company

Netease Technologies News January 24, according to CNBC reports, a few days ago, Tesla just announced a 7% layoff, which is the second round of layoffs in seven months. Now the details of Teslas restructuring plan are beginning to surface. According to documents obtained by CNBC, the US technology media, Tesla asked the dismissed employees to cooperate with the company in prosecuting other peoples cases and abide by strict non-derogation agreement.

According to many of Teslas current employees and newly laid-off employees, Teslas sales, delivery and ModelS and ModelX production teams have experienced massive layoffs. These people also said Tesla had suspended production of Model S cars and Model XSUVs at the Freemont Auto Factory in California at night.

CNBCs Severance Agreement shows that the dismissed Tesla employees will receive at least 60 dayssalary and benefits, regardless of whether they have signed the agreement or not. After the expiration of March this year, the contracted employees can also receive part of the COBRA medical insurance paid by Tesla. Depending on how long they worked for the electric car manufacturer, they could also get extra severance pay.

However, after receiving Teslas dismissal notice, employees had to choose to accept or reject the companys severance pay within seven days, and many received a notice of dismissal last Saturday.

Two laid-off employees said the layoffs resulted in the loss of Teslas promised stock options that had not yet been exercised. These options are part of the seemingly lucrative bonuses they received while working in Tesla, but they are disappointed with the value of these stocks, which have fallen from thousands of dollars to hundreds of dollars as a result of layoffs and power plans.

Two other former employees who were laid off in the previous round of layoffs said bonuses had the same effect on their earnings. These people pointed out that the full-time hourly workers who were dismissed by Tesla were treated differently. In recent layoffs, some have received only two weeksextra pay.

Which groups are affected

A former employee involved in Teslas delivery business and a current employee working at the Fremont plant said the layoffs seemed to affect employees in all sectors and regions, from factory workers to recruiters and receptionists. But Teslas delivery, sales, and ModelS and ModelX production teams have clearly been hit hard by heavy layoffs.

Laid-off workers at Teslas battery factory near Reno, Nevada, a car assembly plant in Fremont, California, and a distribution center said they were evicted by security guards or managers last Friday, some of whom had just finished their shifts.

After Jeff Jones resigned as Teslas head of global security last year, Teslas GF1 division underwent a sustained restructuring and fired at least six security professionals.

A current employee at the Tesla Freemont plant said that it seemed most unlikely that Model3s producers and software engineers would be laid off. In recent weeks, Tesla has moved a small number of workers from the ModelS and ModelXSUV production teams in Fremont to new shifts, or to the Model3 production or delivery teams, the person said.

As part of the restructuring and cost-cutting measures, Tesla cancelled night production of ModelS and ModelX, according to employees familiar with the layoffs. The person also said that the company fired at least six night maintenance technicians and transferred others to the day shift.

Emmanuel Rosner, an analyst at Deutsche Bank, wrote in a report to investors on Friday: We believe that Teslas layoffs are mainly driven by increased manufacturing efficiency and sustained cuts in operating expenses, ultimately enabling entry-level Model 3 to achieve profitability.

A former engineer at Tesla believes that the company has made significant improvements in the production process of Model 3 in recent months. But he added that Tesla had long debated whether it should phase out ModelS or ModelX or transfer production of these cars from the crowded Fremont plant. He pointed out that there was no upgrade team to update ModelS or ModelX.

Tesla spokesman said: We recently announced that we will no longer accept orders for 75 kWh ModelS and ModelX to simplify production and provide more differentiated features for Model3. Because of this change and the improvement of our production line efficiency, we have reduced the production time of ModelS and ModelX accordingly. At the same time, these changes and continuous technological improvements have enabled us to increase our production capacity flexibly in the future, as required. We will provide more details at next weeks financial conference call.

One of Teslas current employees said that workers at the Fremont plant knew little about the companys overall strategy, but they felt that Tesla could not significantly cut costs or cram new ModelY production lines into already crowded factories, while continuing to produce the same number of ModelS, ModelX and Model3. Tesla said there were no plans to shut down ModelS and ModelX.

Details of separation agreement

In addition, Tesla required the dismissed employees to do the following through the severance agreement:

1) Commitment not to belittle Tesla in any way, including the companys managers, directors, employees, shareholders, agents, affiliates, subsidiaries and products, as such actions may cause harm to the company and its business, business reputation or personal reputation.

2) Avoid sharing details of their separation agreements with the public or other current, former Tesla employees and contractors.

3) To cooperate with Tesla in respect of claims facing the company or claims filed by the company. This means that laid-off employees, if summoned, will share their names or correspondence with Tesla and testify in court without the company issuing a subpoena.

4) Arbitration is used to settle disputes over the severance agreement, rather than in the form of collective action.

Last Fridays layoffs were the second in seven months for Tesla to lay off thousands of full-time employees, rather than those related to regular performance appraisals. In another restructuring in June 2018, the company laid off about 9%. In an e-mail to all employees at the time, Elon Musk, CEO, said: We are making tough decisions so we dont have to do that anymore.

According to three employees who worked for Tesla at the time, Tesla fired some of its employees in the last few months of 2018 after conducting an annual performance appraisal. Current employees said that many full-time employeesperformance appraisal began in November 2018, but the current appraisal of employees is still continuing, and they expect more employees to be laid off after the layoffs.

Teslas share price has fallen by about 20% since the layoffs were announced before trading on Friday. (small)

Source: Responsible Editor of Netease Science and Technology Report: Wang Fengzhi_NT2541