Not an open, shut, open case: Tesla factory in California to wait longer

Tesla Inc. was told by the California county that’s home to its lone U.S. auto-assembly plant that it can’t reopen the facility, hours after Chief Executive Officer Elon Musk made plans to do so.

A valet parking tent is seen empty in the parking lot of Tesla's only U.S. vehicle factory in Fremont, California. (REUTERS)
A valet parking tent is seen empty in the parking lot of Tesla's only U.S. vehicle factory in Fremont, California.

“We have not said that it’s appropriate to move forward," Erica Pan, Alameda County’s health officer, said of Tesla on Friday during a web conference. The county said in an emailed statement that it informed Tesla it didn’t meet criteria to reopen.

Tesla aimed to restart the factory Friday afternoon, Musk told staff in an email seen by Bloomberg News. The CEO cited California Governor Gavin Newsom’s announcement earlier that he would let manufacturers in parts of the state resume operations starting Friday.

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What Musk didn’t mention in his memo was that Newsom also had said local authorities could remain more restrictive than the state. San Francisco Bay area counties including Alameda said they were leaving in place health orders that extend through the end of May.

Tesla representatives didn’t respond to requests for comment. Valerie Capers Workman, the carmaker’s head of North American human resources, told employees in a separate email that Tesla’s Fremont plant would start operations with 30% of normal headcount per shift. It’s unclear whether that level of staffing would be enough to allow the company to produce cars again.

“Production restart may not be until June," Dan Levy, a Credit Suisse analyst, cautioned in a note to clients. Tesla shares closed up more than 5% on Friday and have surged 96% this year.

Earlier Defiance

Musk, 48, has sharply criticized shutdown orders, calling them “fascist" and comparing them with forcible imprisonment. Tesla initially defied Alameda’s order in March and resisted pressure from the county and the city of Fremont, claiming it was an essential business. The county’s health officer disagreed and said the factory posed a risk to public health.

Another reason it’s unclear whether Tesla will be able to produce vehicles -- even if Alameda allows the company to reopen in Fremont -- is that its suppliers in other states aren’t able to operate yet.

In Michigan, Governor Gretchen Whitmer issued a separate announcement Thursday giving manufacturers the green light to reopen beginning May 11. That clears the way for parts suppliers to support General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV’s plans to restart their North American plants on May 18.

Musk’s Cheer

Musk cheered Newson’s announcement in a reply to one of the governor’s Twitter posts on Thursday. But Alameda County said in a statement that its current health order takes precedence over Newsom’s guidance.

“We will continue to work with our community and business leaders to accomplish careful, measured progress that allows us to maintain our gains as we move forward to further reopening and better times ahead," Alameda said in a joint statement issued by San Francisco Bay area counties and cities.

Tesla isn’t producing any vehicles worldwide after having suspended production at its only other car factory, located on the outskirts of Shanghai, this week. Several workers who were supposed to return to work on Wednesday after China’s five-day Labor Day break were told that their holiday would be extended and they will return as soon as May 9, people familiar with the matter have said.

In a press conference Monday, Newsom said the state isn’t telling local governments that feel it’s too soon to reopen to modify their orders.

“For example, the Bay Area, Northern California, they have guidelines where they are a little more strict than these guidelines," he said. “If they choose not to come into compliance with the state guidelines, they have that right."

First Published Date: 09 May 2020, 09:00 AM IST
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