Tesla is scuffling with Elon Musk’s strict return to workplace

Tesla Inc. CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) on August 29, 2019 in Shanghai, China.

Aly Song | Reuters

Tesla CEO Elon Musk enacted a strict return-to-the-office policy this spring and suddenly emailed employees on May 31 that they had to “spend at least 40 hours a week in the office.” Anything else, he suggested, is “call.”

Three months after the executive order, Tesla still doesn’t have the space or resources to bring all of its employees back to the office, according to company officials in the US and internal documents seen by CNBC. The people did not want to be named because they were not authorized to speak to the press on behalf of the company.

The return-to-the-office policy has also caused a drop in morale, particularly among teams that allowed pre-Covid-19 employees to work remotely when needed.

In general, prior to the pandemic, Tesla was open to remote work among employees in office functions. As the company’s workforce grew in recent years, the focus has been on establishing international hubs and a new factory in Texas. Not enough new jobs were built or enough office equipment was purchased at existing facilities in Nevada and California to bring all office workers and long-time contractors into forty hours a week.

According to several current employees working there, Tesla recently wanted to bring its San Francisco Bay Area employees into the office for 3 days a week, but a lack of chairs, desks, parking, and other resources proved too much. (Some of this was previously reported by The Information.) Instead, Tesla reset staggered office hours to two days a week.

Even simple consumables such as dongles and charging cables were in short supply. On days when more employees are scheduled to work on-site, the crowded conditions force people to take phone calls outdoors, as Tesla has never built enough conference rooms and payphones to accommodate so many employees present at once.

A blow to morale

The company now monitors employee attendance, with Musk receiving detailed absentee reports on a weekly basis.

Internal records show that as of early September, about one-eighth of employees were out on a typical day in Fremont, California, site of Tesla’s first U.S. vehicle assembly plant. At Tesla, that number was only marginally better, with about a tenth of employees being absent on a typical workday.

According to internal reports viewed by CNBC, the numbers have remained in this range since March 2022, before Musk’s orders. As expected, absenteeism increases on weekends and public holidays.

Absenteeism at Tesla is measured using data from employees checking into facilities, dividing unplanned absences by planned time off to tabulate daily totals, according to internal records and people familiar with the reports sent to Musk.

Not all employees are tracked in the same way. For example, direct reports from Elon Musk do not count towards internal reports.

The return-to-the-office policy — somber and informal as it is — has caused a significant drop in morale among some employees, according to internal news from CNBC.

Before the COVID-19 restrictions, Tesla execs in general were figuring out how much remote work was appropriate for their teams. Musk’s no-holds-barred policies have theoretically eliminated that freedom, though some executives may still be able to negotiate deals for “exceptional” employees.

In early June 2022, just after Musk mandated 40 hours on site for everyone, Tesla drastically reduced its workforce. Employees previously designated as telecommuters but unable to relocate to be in the office 40 hours a week were given until September 30 to relocate or receive severance pay from Tesla.

About a week after this offer was made internally, Tesla HR asked people who lived far away if they planned to move and work 40 hours a week in a Tesla office. Some of those who said they weren’t sure they could move, or who said they definitely couldn’t move, were fired without warning in June, according to internal correspondence obtained by CNBC and two people directly familiar with the terminations has been read.

Politics has also exhausted some of Tesla’s power to recruit and retain top talent. According to internal correspondence and two resignations confirmed by CNBC, at least some popular employees resigned because they wanted more flexible arrangements.

Some workers who lived far from a Tesla office are now living hours away from their families to meet the new requirements, an employee told CNBC.

This employee said he is most concerned about immigrant workers at Tesla, who could lose their visas if the company suddenly decides to end their roles because of the shifting attendance mandate.

They also worried about how Tesla’s narrow-mindedness about remote work might hit the company’s diversity goals.

In its 2022 Diversity Report released in July, Meta stated that “US candidates who accepted remote job offers were significantly more likely to be Black, Hispanic, Native American, Alaskan Native, Pacific Islander, Veterans, and/or people with disabilities Disabilities.” and “Globally, candidates who accepted remote job offers were more likely to be women.”

In Tesla’s most recent 2021 Impact Report, released in May 2022, the company boasted that it made employees feel connected even when working from remote offices.

The report states: “During the global pandemic, we have had a strong focus on expanding our community engagement and ensuring our employees stay connected. In particular, we have expanded our employee resource groups (ERGs) and ensured that our programs are accessible in a remote work environment. ..We made sure our employees felt heard and connected more than ever as they moved to virtual events to encourage inclusion across different locations, physical borders and time zones.”

The company hasn’t released figures on how many employees were allowed to work remotely before and after the pandemic began, or how that affected its workforce demographics.

Tesla did not respond to a request for comment.