Tesla Striving To Cut Costs By Seeking Rent Relief As Coronavirus Affects Business

Tesla Inc. TSLA has contacted landlords to negotiate rent relief for its stores and service centers.

What Happened

Tesla has been in touch with landlords regarding rent relief as the coronavirus pandemic has shuttered much of its business.

In an email cited by the Wall Street Journal, the Palo Alto-based company wrote, “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.”

Tesla explained with regards to their rental obligations, “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.”

Why It Matters

Last year, it was reported that Tesla wanted to close most of its brick and mortar stores, but then decided to reverse course.

The automaker has now told its landlords it wants to discuss options in the coming days and weeks “so we can continue to partner and work together to ensure a continued and mutually beneficial relationship,” reported the Journal.

It is estimated that the company’s deliveries will suffer a 21% decline to 75,000 vehicles in the current quarter, compared to last year's numbers.

Tesla has already furloughed all non-essential workers in the United States and has asked others to take a pay cut.

Price Action

Tesla shares traded 3.46% higher at $673.48 in the after-hours session on Monday. The shares had closed the regular session 13.6% higher at $650.95.