Tesla aims to restart California plant after getting green light

Tesla Inc. plans to reopen its sole U.S. car plant as soon as Friday after California’s governor allowed manufacturers to resume operations.

The company aims to restart the factory Friday afternoon, Chief Executive Officer Elon Musk told staff Thursday in an email seen by Bloomberg. The vehicle-assembly plant in Fremont, California, has been idled since March 23 due to shutdowns aimed at limiting the spread of the coronavirus.

California Governor Gavin Newsom said Thursday he will let manufacturers in some parts of the state resume operations starting Friday, while Michigan’s Gretchen Whitmer cleared the way for them to reopen beginning May 11.

The implications of the announcements are clear for Detroit, with General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV now having a green light to restart North American plants starting May 18. Tesla’s position is murkier, with California still allowing counties to remain more restrictive and potentially block Musk from reopening his assembly plant in the state.

“We’re not out of the woods yet, but this is an important step forward," Whitmer said in a statement. “This is good news for our state, our businesses, and our working families."

A Tesla representative in China declined to comment outside regular U.S. business hours.

Whitmer’s decision clears the way for parts suppliers to start running their assembly lines to support vehicle plants resuming production later this month.

On Twitter, Newson’s announcement elicited a cheer from Musk, who has sharply criticized shutdown orders.

But Alameda County, which is home to Tesla’s plant in Fremont, said in a statement Thursday that the region’s current health orders remain in place and takes precedence.

“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.

Separately, Tesla suspended production at its only other car factory — located on the outskirts of Shanghai — this week and many 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.

Newsom’s Deference

In a press conference, 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."

Michigan is providing clear guidance for auto companies, component makers and factory workers after weeks of uncertainty about the timing. Most auto output ground to a halt in mid-March to slow the spread of the coronavirus and brace for a slump in car demand from home-bound consumers.

Losing just two weeks of production cost GM $600 million in cash in the first quarter, and carmakers have been borrowing money to tide them over during a shutdown likely to hurt second-quarter earnings even more.

Union’s Response

The United Auto Workers, whose members man the assembly lines at Ford, GM and Fiat Chrysler, has resisted earlier efforts to reopen plants. But the union’s president, Rory Gamble, signaled earlier this week the UAW would defer to the manufacturers after participating in meetings with them on safeguarding worker safety.

“We all knew this day would come at some point," Gamble said in a statement. “While the companies have the sole contractual right to determine the opening of plants, our UAW focus and role is and will continue to be, on health and safety protocols in which we have the contractual right to protect our members."

Under Whitmer’s new executive order, manufacturers must implement a series of measures designed to protect workers from Covid-19. These requirements include a daily screening protocol when workers enter plants, including a questionnaire and temperature checks “as soon as no-touch thermometers can be obtained."

They must also create dedicated entry points at every facility and suspend visits by all personnel deemed nonessential such as factory tour guests. Ford, GM and Fiat Chrysler already have those protocols in place.