The Latest News Means There's Trouble At Tesla

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The news comes as COVID-19 continues to disrupt Tesla's normal operations.

Tesla has furloughed half of its sales and delivery workforce in the US as the novel coronavirus continues to create issues for the EV manufacturer's normal day-to-day operations. It's a thorough reversal for a company that initially wasn't even going to slow production at its Fremont, California assembly plant, even after an area stay-at-home order - among the first in the country - was issued for the Bay Area.

Tesla's sales and deliveries workforce are being furloughed based on tenure and rank, employees told CNBC, not on performance, and some are concerned the furloughs are just a precursor to permanent layoffs.

2017-2020 Tesla Model S Front View Driving Tesla
2017-2020 Tesla Model S P100D Front Angle View Tesla
2016-2020 Tesla Model X Front View Driving Tesla
2016-2020 Tesla Model X Front Angle View Tesla

There are two reasons for concern in that regard: Tesla's weakened sales prospects due to the global COVID-19 pandemic, and the company's longstanding interest in shedding stores and pivoting more toward online sales. EV sales are expected to take a much larger hit in 2020 as a result of the virus than the rest of the automotive industry, with some analysts expecting sales to nearly halve between 2019 and 2020. That sort of weak performance would make cost-cutting all but inevitable.

But as early as February of last year, Tesla had already indicated a desire to cut costs by closing stores and transitioning mostly or entirely to online sales. CEO Elon Musk later specified that the company would keep stores with high foot-traffic and substantial sales performance.

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2017-2020 Tesla Model 3 Side View Driving Tesla
2017-2020 Tesla Model 3 Front View Driving Tesla
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Tesla's global sales reached a new record high in 2019, the company moving some 367,000 Model S and Model 3 sedans, and Model X crossovers, the numbers bolstered by increased production of the affordable Model 3. The company just started production on the new Model Y crossover, built on the 3's more inexpensive architecture, before the novel coronavirus outbreak spread globally, throttling business and eventually prompting the closure of its Fremont factory.

Tesla is currently targeting a May 4th date to restart production operations in North America, in-line with Fiat Chrysler's target restart date, but it's still unclear whether California's stay-home orders will allow that to happen.

2020 Tesla Model Y Front View Tesla
2020 Tesla Model Y Side View Tesla
2020 Tesla Model Y Front View Tesla
2020 Tesla Model Y Rear View Tesla
Source Credits: CNBC

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