Tesla is facing a backlash from employees at Gigafactory Shanghai who are complaining about their performance bonuses having been cut reportedly because of an accidental death at the factory earlier this year.
Gigafactory Shanghai has become a critical asset for Tesla.
The factory was able to quickly ramp up production to become Tesla’s highest output factory with a capacity north of 750,000 electric vehicles per year.
The efficiency of the plant also enabled the automaker to profit from high margins last year and allowed for room to implement price cuts earlier this year.
By most accounts, the factory is performing extremely well, which is why some workers are voicing their concerns that their performance bonuses have been cut this quarter.
These Tesla workers have been voicing their concerns on Chinese social media and even on Twitter, which is officially blocked in the country:
According to a report from Reuters, Tesla workers were told that their performance bonuses would be cut and the reason given to them was “due to a safety accident” at the factory during the first quarter.
The report links the accident to the death of a Tesla worker at the factory’s wielding workshop on February 4 that has been reported to the local Pudong government.
A government investigation concluded that the deceased worker was directly responsible for the accident, but that Tesla’s safety management also “indirectly contributed to the accident.”
It’s not uncommon in China to have compensation reduced because of a safety incident, but it is generally linked to a safety bonus and not a performance bonus.
The performance bonus that was cut was reportedly worth around 2,000 yuan ($291 USD).
Before you ask why all the fuss for less than $300 in bonuses, keep in mind that Tesla Giga Shanghai production workers earn around 110,000-120,000 yuan (~$16,000 USD) a year, including bonuses and overtime pay, according to a recruitment post.
Therefore, it does make a big difference. And yes, it is strange to reduce the performance bonuses over a safety accident, especially as the plant achieved record performance.
We don’t have the exact circumstances of the deadly accident, but generally work accidents happen more often when a company pushes workers hard to achieve higher performance.
While obviously no one wants to incentivize poor safety leading to death, it is also a bit counterintuitive to incentivize them to achieve higher performance and then penalize them when they succeed but were focused so hard on performance that it may have led to safety issues.
If they want to put their money where their mouth is, they should incentivize safety with a safety bonus that is bigger than the performance bonus.