“Tesla” CEO Elon Musk implemented a strict return-to-office rule in the spring of this year, advising employees in a sudden email sent on May 31 they must “spend a minimum of forty hours in the office per week.” Anything else, Musk suggested, is “phoning it in.”

Three months after this decision, Tesla still needs more resources or space to get all of the employees back to the office, according to those employed by Tesla in America. United States and internal documents reviewed by CNBC. The employees refused to identify themselves since they weren’t allowed to speak with the media on behalf of the company.

The return-to-office policy has led to a decline in morale, particularly among teams allowing employees to remote work before Covid-19.

Overall, Tesla has been open for remote work for office employees before the epidemic. The company’s workforce grew during the last few years. The main focus was establishing international hubs and a brand-new manufacturing facility in Texas. The company needed to construct more workspaces or purchase more office equipment at its locations in Nevada or California to allow the entire office staff and long-term contractors on the same time frame of forty hours per week.

According to several people who work at the company, Tesla recently wanted to invite its employees from their homes in the San Francisco Bay Area to the office for three days a week. However, the lack of desk space, chairs parking spots, chairs and other amenities proved to be too for them. (Some aspects of it were covered in The Information.) However, Tesla set staggered in-office schedules to allow for two days each week.

Even basic items like charger cords and dongles need more supply. On days when employees are expected to be on-site, overcrowded circumstances force people to make calls outside since Tesla needed more conference rooms or phone booths to hold this many employees simultaneously.

A blow to morale business is now monitoring employees’ attendance, and Musk is receiving weekly reports on absences.

At the beginning of September, internal data show that about one-eighth of employees were absent during a typical working day in Fremont, California, the site of Tesla’s first U.S. vehicle assembly plant. The figure in all of Tesla’s companies was better, and about 10% of employees were not working on a typical day.

The figures have been within the range of March 2022, which is before Musk’s orders, as per internal reports seen by CNBC. Absenteeism is high during holidays and weekends, which is what one would imagine.

The absence rate at Tesla is measured by analyzing data from employees who enter the facilities, with absences that are not planned separated by time off scheduled for daily totals following internal documents and those who are familiar with the reports sent to Musk.

The tracking of employees is sometimes different. The direct reports made towards Elon Musk do not have their badge swipes counted in internal reports, for instance.

The return-to-work policy, unclear and ambiguous as it is, has led to a dramatic decline in some employees’ morale, per internal communications read by CNBC.

Before COVID-19’s restrictions, Tesla managers generally figured out what amount of remote work was suitable for their respective teams. Musk’s policy of hardline elimination removed that flexibility in principle, but certain executives may be able to negotiate deals with “exceptional” employees.

At the beginning of June 2022, shortly after Musk ordered 40 hours at the office for all employees, Tesla made steep cuts in the number of employees it employed. Employees who had been designated as remote workers but could only relocate to work forty hours per week were granted September 30 to relocate or receive a severance pay package from Tesla.

A week after offering the offer to employees, Tesla HR asked people who live far away if they were planning to relocate to work in a Tesla office for 40 hours per week. A few who stated they were unsure whether they could relocate or absolutely could not relocate were dismissed in June without notice in a memo to employees, which was reviewed by CNBC and two individuals directly involved with the firings.

The policy also drained the power of Tesla to retain and recruit the best talent. At least a handful of popular employees left due to wanting more flexible schedules, as per internal communications, and two resignations that CNBC confirmed.

An employee told CNBC that some employees who resided in a remote area from a Tesla office now live in a different location from their families to meet the new rules.

One employee stated that they were worried the most about immigrant employees at Tesla that could have their passports taken away if Tesla abruptly decides to end their jobs due to the changing attendance requirement.

They were also concerned about how Tesla’s reluctance to remote work could impact the company’s diversity targets.

In its report on diversity for 2023 published in July, Meta revealed that “U.S. candidates who accepted remote job offers were substantially more likely to be Black, Hispanic, Native American, Alaskan Native, Pacific Islander, veterans and people with disabilities,” and “Globally, candidates who accepted remote job offers were more likely to be women.”

In the most recent Tesla 2021 Impact Report released in May 2022, the company boasted of how its employees felt connected, even when they worked from offices in remote locations.

The report states, “During the global pandemic, the focus was significant on enhancing our involvement in the community and ensuring that our employees were always connected. In particular, we increased and diversified our Employee Resource Groups (ERGs) and ensured our programs were accessible from a remote environment…We ensured that our employees felt more connected than ever when they shifted towards virtual events to encourage inclusiveness across diverse geographical boundaries, physical boundaries and the time zone.”

The company did not give figures for the number of employees it permitted working from distant areas before and after the outbreak started, or for how this affected the demographics of the workforce.