Tesla temporarily halts production on Models S and X

Tesla’s production lines for the Model S and Model X vehicles will go dark on Dec. 24, Christmas Eve, and they’ll stay that way until Jan. 11, 2021.

The company informed employees of the plan on Friday, according to an email viewed by CNBC. Affected employees will be compensated with a week’s pay (plus paid holidays) during the two-and-a-half week period. 

The remaining days amount to surprise (but unpaid) time off, though the email notes that employees will have “limited paid opportunities for you to support other shops or volunteer” to handle vehicle deliveries. Affected workers are also invited to use their own paid time off to make up for the lost days.

A separate, company-wide email from CEO Elon Musk failed to explain the reasoning for the sudden shift. He wrote that Tesla is “fortunate to have the high-class problem of demand being quite a bit higher than production this quarter,” an explanation that would suggest production — and paid time on the job, by association — should continue.

It’s likely that the production pause does have to do with demand, but not quite in the way Musk’s email is characterizing things. As CNBC’s report notes, Tesla’s third-quarter numbers showed light interest in the Models S and X, with the two together accounting for only 11 percent of the company’s vehicle deliveries from July through September.

The company’s email to workers on the two production lines characterizes the unplanned time off (which, again, is partially unpaid) as a positive. “We would like you to take the opportunity to refresh or spend time with your family, so Tesla will be giving you a full week pay for the week of Jan. 4th,” the email reads, making no mention of the preceding week between Christmas and New Year’s Eve.

Musk’s email reference to Tesla’s “high-class problem” of demand outweighing production raises questions about the company’s decision to make part of the enforced time off unpaid. If the company is in such a great spot, why cut pay during this unplanned time off?

The company made a similar move in 2018 when production temporarily halted on the Model 3, and again in the face of high demand generally. Although Tesla claimed that the production stoppage, which happened in April, had been planned since January, reporting at the time revealed that production line employees were blindsided by the move, and forced to either use PTO or lose pay for the missed days.

Tesla is notably not a union shop, and Musk has said he’s not anti-union. He’s defended the state of things at the company in the past by pointing out that workers would lose their stock options if they joined United Auto Workers. That may be, but an unexpected work stoppage that robs workers of some of their expected pay right around Christmas is hardly a great look for Tesla, especially given its “high-class problem.”