Tesla Idling California Car Plant To Comply With Bay Area’s Coronavirus Lockdown Rules

Tesla, acknowledging the severity of the coronavirus pandemic, plans to temporarily halt auto production work at its main San Francisco Bay Area plant early next week, after it delayed compliance with strict local “shelter-in-place” rules for nonessential businesses aimed at curbing the spread of COVID-19.

The Alameda County Sheriff’s Department had said this week that Tesla wasn’t an essential business during the crisis and needed to suspend normal operations at its Fremont, California, plant. The company reduced staffing to just 2,500 workers, a quarter of the normal level, but was continuing with some electric vehicle production. 

“Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers,” the company said in a statement Thursday. “As such, we have decided to temporarily suspend production at our factory in Fremont, from end of day March 23, which will allow an orderly shutdown.”

Basic functions to support vehicle and energy service operations and charging infrastructure will continue. Tesla’s Buffalo, New York, plant that makes solar panels is also suspending production for now. However, the company’s Gigafactory in Nevada that makes battery packs will continue to operate for now, as will Tesla’s Supercharging network needed to power customers’ vehicles.

CEO Elon Musk has taken to Twitter to sound somewhat skeptical about the severity of coronavirus, saying last week that “coronavirus panic is dumb.” Across the U.S. nearly every major auto manufacturer announced plans to curtail North American production on Wednesday due to the public health crisis. Meanwhile, Tesla’s decision to continue building cars, albeit with far fewer workers, was in direct defiance of guidance from local officials whose patience was growing short. 

“They are still not operating at basic minimum levels,” Sergeant Ray Kelly, a spokesman for the Alameda Sheriff’s Dept., told Forbes on Wednesday. “They are operating at essential levels and need to move to minimum basic.” 

By late Wednesday, however, Musk was offering to help make much-needed ventilators for hospitals treating COVID-19 patients, telling New York Mayor Bill de Blasio that he would work to assist the city. 

Tesla shares, along with all U.S. financial markets, have plunged in the past two weeks as the impact of the coronavirus expands, dropping 53% from its record high of $917.42 on February 19 to $427.64 on March 19. 

The company said its cash position at the end of 2019’s fourth quarter was $6.3 billion, ahead of a $2.3 billion capital raise in February. 

“We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty,” the company said. “At the end of Q4 2019, we had available credit lines worth approximately $3B including working capital lines for all regions as well as financing for the expansion of our Shanghai factory.”

The Fremont plant is the only large auto-assembly facility on the U.S. West Coast. It was purchased from Toyota in 2010 and currently builds Model 3 and S electric sedans and Model X and Y crossovers. The company tweeted on Monday that deliveries of the Model Y started this week.

Alameda County, home to Fremont, implemented the shelter in place rules on March 16 along with San Francisco and Santa Clara Counties, effectively preventing most Silicon Valley businesses, excluding grocery stores, pharmacies, medical facilities and other essential services, from continuing normal operations for three weeks.