Before dawn on Tuesday, workers coming off a shift at Tesla’s factory in the Silicon Valley city of Fremont boarded buses to return to the offsite lots where they’d parked their cars. Nearby, more workers headed into the factory to take their places. But the scene, recounted by The Los Angeles Times, is unlikely to repeat itself in coming weeks—halting production of Tesla’s electric sedans and SUVs, including the newly available Model Y.
Bay Area health officials have mandated just about everyone in the region stay in their homes as part of the escalating struggle to contain the spreading novel coronavirus. Tesla CEO Elon Musk kept his factory running through the first day of the stay-at-home order, apparently concluding that Tesla qualified as an “essential business” that did not have to close. But late Tuesday, the county sheriff announced that building electric cars is not an “essential business.” It is allowed to carry on with “minimum basic operations,” like having somebody in the office to process payroll. “That effectively means they can’t operate business as usual,” and can’t keep building cars, says Sgt. Ray Kelly, a spokesperson for the Alameda County Sheriff’s Office.
It’s a bad time for Tesla to have to close its only car plant in North America. Until earlier this month, it had been on a roll: Its stock hit an all-time high of more than $900 in February, following strong results in the second half of 2019. It overcame its long tradition of missing deadlines by starting deliveries of the Model Y ahead of schedule. It just made its 1 millionth car, and recently topped Consumer Reports’ owner satisfaction ratings by a wide margin.
But the spreading pandemic has chopped Tesla’s share price in half, to $430 on Tuesday, as Chinese electric car purchases cratered and fear spread of a recession that will suppress appetite for Tesla’s luxury vehicles. Still, even in China, Tesla sold nearly 4,000 vehicles in February, many more than its electric competitors, according to China Automotive News. And if it can beat a downtrend in car sales in the rest of the world, it would presumably like to keep making the cars people are buying.
So the command to halt production in Fremont is a rough one. The “shelter in place” orders came from six Bay Area counties, including Alameda, home to Fremont. They command the closure of workplaces for the next three weeks, with exemptions for “essential” businesses, including first responders, police, court personnel, grocery stores, banks, and restaurants (which can only offer delivery or takeout).
For the most part, it’s up to businesses to determine if they’re essential. Tesla’s factory, which employs more than 10,000 people, doesn’t fit any of those categories. At a stretch, it might count among “gas stations and auto-supply, auto-repair, and related facilities,” but only if you’re more interested in the letter of the law than its spirit. And on this one, it’s the spirit that really counts. “Businesses are asked to comply,” says Shawn Wilson, chief of staff to Scott Haggerty, the Alameda County supervisor whose district includes Fremont. They decide whether or not they’re “essential.” And the order’s definition of essential activities—those “necessary for the health and safety for individuals and their families”—is so mushy, it doesn’t work if people look for loopholes. They have to take it seriously.
The Tesla Model Y, the newest addition to its lineup.
Courtesy of Tesla