Tesla US vehicle factory to suspend production due to coronavirus

20 March 2020 - 08:20 By Reuters
Signage outside the Tesla Motors plant in Fremont, California.
Signage outside the Tesla Motors plant in Fremont, California.
Image: Tony Avelar/ Bloomberg

Tesla Inc will suspend production at its California vehicle factory beginning on March 24 to comply with local orders aimed at curbing the spread of coronavirus, the company said on Thursday.

Tesla said its New York solar roof tile factory will also temporarily suspend production, while operations at its Nevada battery plant will continue.

“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.

Tesla's shares fell nearly 9.4% in after-hours trading after the announcement.

The decision to suspend production at the Fremont, California, plant comes as Tesla ramps up production of its Model Y sport utility vehicle at the factory, which CEO Elon Musk has said will see higher demand than all of Tesla's other models combined.

The automaker also said it believed it had enough liquidity to successfully navigate the extended period of uncertainty, with about $6.3 billion (roughly R109,363,905,000) in cash at the end of the third quarter, before a recent $2.3 billion (roughly R39,926,505,000) capital raise.

Tesla's decision to suspend production came after the company met with Fremont city officials.

The city and officials from the surrounding Alameda County did not immediately respond to a request for comment on Thursday.

Alameda County is one of six counties covered by an order from regional officials to “shelter in place”, which limits activity, travel and business functions to only the most essential, and advises people to stay home except for the most crucial reasons.

The county sheriff's office said on Tuesday afternoon Tesla was not considered an essential business and cannot continue to operate its factory normally.

Tesla said on Thursday it would continue basic operations at the Fremont factory in compliance with the order to support vehicle and energy services and charging infrastructure.

Tesla's sole US auto factory employs more than 10,000 workers, with annualised production of slightly more than 415,000 units by the end of December 2019.

In an e-mail to employees on Thursday, Tesla said operations at the Fremont plant will transition to “minimum basic operations” beginning on March 24.

Employees at the California and New York factories will be provided with paid leave during suspended operations, the e-mail said.

Tesla's Giga factory in Nevada, which employs about 7,000 people, produces battery packs for its electric vehicles and stationary storage systems.

The company's Buffalo, New York, plant produces the company's solar roof tiles as well as some Supercharger and energy storage components. It has more than 1,500 jobs in the city of Buffalo, the company said last month.

US automakers Ford Motor Co, General Motors Co and Fiat Chrysler Automobiles NV, on Wednesday said they were shuttering their US plants, as well as factories in Canada and Mexico, to stop the spread of coronavirus.


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