Tesla will suspend operations at its Fremont factory beginning Monday, the company said Thursday, ending a days-long standoff with local officials over whether the electric car maker could continue manufacturing under the Bay Area’s shelter-in-place order.
Tesla said the decision to cease vehicle production in Fremont, where more than 10,000 Tesla employees normally work, came after days of talks with local, state and federal officials over what aspects of the electric carmaker’s operations could remain open under the order, which went into effect Tuesday and is scheduled to last at least until April 7, as part of a local effort to slow the spread of coronavirus.
The order has effectively shut down almost all workplaces in the region, with exceptions for essential businesses such as health care, grocery stores and gas stations. But Tesla had continued to produce vehicles at its Fremont facility while discussing with county officials whether such work qualified as essential.
It is by far the most prominent business in the region to have continued most operations under the order — and its actions drew wide publicity in part because its CEO, Elon Musk, has been openly skeptical of whether the “coronavirus panic” is justified. The company, however, has insisted it violated no rules.
“We have followed and are continuing to follow all legal directions and safety guidelines with respect to the operations of our facilities, and have honored the Federal Government’s direction to continue operating,” Tesla said, in a company statement. “Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers.”
Tesla’s announcement on Thursday ended a difficult predicament for local officials. A Fremont Police Department spokeswoman told this news organization Thursday morning their agency had been tasked with enforcing the county’s health order, but it was unclear what enforcement actions it could take against Tesla if the company continued operating its assembly line.
On Wednesday, automakers Ford, General Motors and Fiat Chrysler Automobiles all said that they would shut down their North American manufacturing operations until at least the end of March, out of concern of the dangers to plant employees who must work in close proximity.
Tesla said all employees at Fremont will be paid at their regular pay rates until the end of day Monday and then will receive paid leave while operations are suspended.
“The writing was on the wall after Detroit closed the Big Three (automakers) yesterday,” said Dan Ives, managing director at Wedbush Securities. “It was just a matter of time until Tesla was going to be forced to shut down operations in Fremont.”
While Tesla is closing down its Fremont plant for the foreseeable future, the company said it would continue work on batteries at its factory in Nevada — which has as yet no shelter-in-place order — and its Tesla Supercharger vehicle charging network would remain in operation. But Tesla said it will suspend production at its plant in Buffalo, New York, where it makes solar panels and other solar equipment.
The decision to put a hold on production in Fremont followed concerns from Tesla employees about the company’s position on their health and well being.
Though Alameda County officials confirmed late Tuesday that Tesla’s car manufacturing operations did not constitute an essential business function, employees at the company said work proceeded as usual at the Fremont plant. On Wednesday morning, Valerie Workman, Tesla’s human relations director, sent an email to Tesla employees saying they “should continue to report to work if you are in an essential function: production, service, deliveries, testing and supporting groups as discussed with your manager.”
One Tesla factory employee said “there’s no way we could actually work six feet apart” on the floor, noting that some work stations might be positioned about four feet apart, but there’s still plenty of contact between workers.
“All it takes, honestly, is one person to get sick, and the whole plant is genuinely screwed, because we are in such close quarters,” the employee added.
Tesla employees reporting for work Thursday had their temperatures taken before they entered the company’s facilities. In an email sent Wednesday night to Tesla employees, and obtained by this news organization, Workman said that in addition to taking employee’s temperatures, the company would be “handing out masks to be worn throughout the day” and “adding more hygiene stations inside the facility, rearranging operations to promote social distancing as much as possible, and increasing cleaning frequency of all work areas.”
Meanwhile, Musk said on Twitter late Wednesday that he would have Tesla, and SpaceX, where he is also CEO “make ventilators if there is a shortage” due to the coronavirus pandemic.
“Tesla makes cars with sophisticated hvac (heating, venting and air-conditioning) systems. SpaceX makes spacecraft with life support systems. Ventilators are not difficult, but cannot be produced instantly.”
Tesla makes cars with sophisticated hvac systems. SpaceX makes spacecraft with life support systems. Ventilators are not difficult, but cannot be produced instantly. Which hospitals have these shortages you speak of right now?
— Elon Musk (@elonmusk) March 19, 2020