While some companies may be wasting time asking for rent concessions as a result of the coronavirus lockdown, Tesla, which is now valued at about $130 billion as of Tuesday morning's trading, is telling its landlords its going to be paying less in rent.
The company sent out an e-mail to landlords as part of a broader push to find cost savings during the coronavirus lockdown, according to the Wall Street Journal. In it, they unilaterally decided they would be paying less in rent.
The e-mail read: “The rapid world pandemic that is now affecting our country has led Tesla to make strategic decisions to ensure the company’s long term success and growth. As a result of the increasing restrictions on our ability to conduct business, we would like to inform you that we will be reducing our monthly rent obligations effective immediately.”
The company, after unilaterally deciding rent concessions were in order, then said it hopes it can discuss options with its landlords in the days and weeks to come “so we can continue to partner and work together to ensure a continued and mutually beneficial relationship.”
The demand by Tesla raised some eyebrows on social media:
Look who's panicking now? $TSLA valued at $120 billion should not be asking for rent savings due to coronavirus— KillingMyCareer (@MelaynaLokosky) April 14, 2020
Unless of course @Tesla @ElonMusk are engaged in overvaluation fraud via false sales projections to give the appearance of hypergrowth, eh @TheJusticeDept & @FBI? https://t.co/b8kmQ3XztP pic.twitter.com/Ucs7rVWn1L
one of these companies is faking deliveries and can't afford to pay rent pic.twitter.com/3Cm9JrnSZO— EVent Horizon (@evdefender) April 14, 2020
Recall, just two days ago, we reported that Tesla had furloughed 50% of its sales and delivery team in the U.S.
The company announced on Friday that about half of the company's entire U.S. sales and delivery staff would be affected.
Workers in sales and deliveries were furloughed by their rank and their tenure, not on the basis of their performance. Anyone with entry-level roles or lower sales quotas each quarter have all been furloughed, according to sources at Tesla. Employees in senior sales and delivery roles who have been with the company for less than two years have also been furloughed.
One furloughed employee worried that permanent layoffs could be next as a way for Tesla to continue cost cutting that began in 2019.
Tesla had suspended production at Fremont and in New York on March 24. The Fremont suspension came after a spat with the Alameda County Sheriff's department about whether or not Tesla was an "essential" business. It also came 8 days after Musk told his workers they were "more likely to die in a car crash" than from coronavirus.
Two days after Tesla's delayed close, on March 26, it was reported that two Tesla employees had tested positive for coronavirus.
According to an email sent to U.S. employees by in-house counsel Valerie Capers Workman, workers pay is going to be cut 10%, directors will have their salaries cut by 20% and VP salaries will be cut by 30%, the company said.
Tesla said that pay for salaried employees would be reduced on April 13 and that cuts would remain in place until the end of the second quarter, despite the company's plans to re-open in early May.