Employee Discontent at Tesla Shanghai Factory Over Performance Bonus Cuts

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Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020. REUTERS/Aly Song

Tesla Workers Appeal to Elon Musk and Chinese Government over Performance Bonus Cuts

SHANGHAI – Tesla’s Shanghai factory is experiencing an unusual amount of employee discontent, with workers taking to social media to appeal to Elon Musk and the Chinese public after being informed of plans to cut their performance bonuses. According to online posts by workers, some also criticized Tesla’s handling of a fatal accident earlier this year, questioning whether the deductions were linked to it.

This situation is significant as it marks a rare outburst of discontent at Tesla’s Shanghai plant, which is its largest and most productive site globally. In fact, Musk himself praised the workers last year for keeping operations running during the city’s two-month COVID lockdown, saying they had burned “the midnight oil.” However, recent posts on platforms such as Baidu Tieba and Twitter (which is blocked in China) suggest that workers are unhappy about the treatment they are receiving.

A truck transports new Tesla cars at its factory in Shanghai, China May 13, 2021. REUTERS/Aly Song
A truck transports new Tesla cars at its factory in Shanghai, China May 13, 2021. REUTERS/Aly Song

Several posts implored Musk and Tesla’s Asia unit to pay attention to the arbitrary deduction of performance bonuses for frontline workers at the Shanghai factory. According to two workers at the plant, they were informed by supervisors over the weekend about a cut to their quarterly bonus payout, which was linked to the factory’s performance. When workers asked about the reasons for the bonus cut, Tesla supervisors mentioned a “safety incident” but declined to provide further details out of concern for their jobs.

Several online posts claim that workers at the Shanghai plant are being unfairly punished for an incident that occurred earlier this year, in February. According to a report published by the local Pudong government on April 12, there was a mechanical accident in the welding workshop at Tesla’s Shanghai plant on February 4 that killed one worker. The government’s investigation concluded that oversight in Tesla’s safety management indirectly contributed to the accident, and the deceased worker was directly responsible.

Government Intervention Is Likely

Many workers claim that their quarterly bonuses have been cut by around 2,000 yuan. Base salaries at the Shanghai plant start from around 5,400 yuan per month, with additional income in some cases coming from overtime work shifts and annual and quarterly bonuses. Before tax, workers can earn around 110,000-120,000 yuan per year, including bonuses and overtime pay, according to a recruitment post on the state-owned Lingang Group’s official WeChat account, which provides hiring services for companies in the region. This level of pay is in line with other international and Chinese manufacturers in the area.

A Tesla sign is seen at its factory in Shanghai, China, May 13, 2021. REUTERS/Aly Song
A Tesla sign is seen at its factory in Shanghai, China, May 13, 2021. REUTERS/Aly Song

Tesla and Elon Musk have not yet responded to requests for comment on the matter. Maye Musk, Musk’s mother, who has attracted a following in China, recently completed a two-week tour of the country where she promoted her memoir. The upcoming earnings report from Tesla, which is set to be released on Wednesday, is expected to be a key focus for investors and analysts. They will be looking to see how Tesla’s round of price reductions on its electric vehicles has affected its industry-leading margins. Tesla Chief Financial Officer Zach Kirkhorn stated last quarter that the company expects to sustain a gross margin of 20% on autos, excluding leases and regulatory credits, with an average sale price for its EVs globally above 207,599 yuan.

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In conclusion, the situation at Tesla’s Shanghai plant highlights the importance of fair treatment for workers in the manufacturing industry. Companies should ensure that their employees are appropriately compensated for their work and that their safety is paramount. It will be interesting to see how Tesla responds to this situation and whether it has any effect on the company’s upcoming earnings report. – Reuters