Tesla CEO Elon Musk woke up to an unwelcome surprise over the weekend: a report that his company used cheap foreign labor to build new facilities.
In a lengthy feature, The Mercury News on Sunday accused Tesla (TSLA) of using approximately 140 workers from Eastern European countries to build a car-painting facility at Tesla’s Fremont, Calif. Plant. The report, which includes claims from “dozens of interviews,” as well as analysis of payroll data and court documents, claims that Tesla paid workers as little as $5 an hour—a far cry from the $52-an-hour average the company would have to pay an American contractor.
According to the report, the information on Tesla’s alleged use of cheap foreign labor surfaced after one of those workers, Greg Lesnik, an electrician from Slovenia, was injured on the job. Lesnik, the report claims, was recruited “by a small Slovenian company” that promised to send him to the U.S. On the promise of a job supervising a South Carolina auto plant. Instead, the report claims, Lesnik, along with many others, went to work at Tesla in Silicon Valley.
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“Lesnik, 42, and his co-workers were flown into the U.S. For months at a time, housed in nondescript apartments, and shuttled to the Tesla plant six and sometimes seven days a week, according to workers and the suit,” reports The Mercury News, referring to a lawsuit Lesnik has brought against Tesla and partners. The outlet added that Tesla itself did not hire Lesnik and the other workers directly.
The allegations come as Tesla is trying to break out from its status as a popular electric car maker for the rich to one that can appeal to people on all budgets. Earlier this year, the company unveiled the Model 3, an all-electric car that will have a projected starting price of $35,000—a far cry from the vastly more expensive Model S and Model X.
While Tesla hopes to get the mass-market sedan into production within the next year-and-a-half, the company has acknowledged that it needs to spend considerable cash to expand its Fremont factory to handle the massive demand for its cheaper car.
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Tesla has enlisted the help of Eisenmann, a German-based manufacturer, to oversee the project, according to The Mercury News. Lesnik cites Eisenmann in his lawsuit, though that company denied responsibility for his injuries, including two broken legs, while working at Tesla’s facilities.
As of this writing, Tesla claims to employ approximately 6,000 U.S. Workers in that factory. While The Mercury News claims to have identified 140 foreign workers, some of those say they’re pleased with their positions at Tesla and are happy to be working.
Tesla is by no means the first Silicon Valley company accused with using foreign (and cheap) labor with B1 and B2 U.S. Visas. Over the last several years, a slew of reports have cropped up, claiming that companies across Silicon Valley have brought in highly educated foreign workers to handle tasks at their companies. Some critics have likened the practice to “modern day indentured servitude,” adding that workers are often paid significantly less to do the same work as their American counterparts. The Mercury News claims that is the case with Tesla.
Only heard about this today. Sounds like the wrong thing happened on many levels. Will investigate and make it right.
— Elon Musk (@elonmusk) May 16, 2016
Tesla did not immediately respond to a request for comment on the report. However, Tesla CEO Elon Musk on Monday tweeted that he will look into the matter, and if necessary, fix it.
“Only heard about this today,” Musk tweeted, referring to the article. “Sounds like the wrong thing happened on many levels. Will investigate and make it right.”