Tesla announces shutdown of Fremont factory

Editor’s note: This information is current as of the evening of March 19. Further updates may follow.

After several days of contradictory information, and what appears to have been a valiant attempt to keep the vehicle production lines open, Tesla issued the following statement Thursday:

Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers.

As such, we have decided to temporarily suspend production at our factory in Fremont, from end of day March 23, which will allow an orderly shutdown.  Basic operations will continue in order to support our vehicle and energy service operations and charging infrastructure, as directed by the local, state and federal authorities. Our factory in New York will temporarily suspend production as well, except for those parts and supplies necessary for service, infrastructure and critical supply chains. Operations of our others facilities will continue, including Nevada and our service and Supercharging network.

In many locations, we are in the process of implementing “touchless deliveries” so customers can continue to take delivery of their vehicle in a seamless and safe way. Due to the unique over-the-air connectivity of our vehicles, customers are able to unlock their new cars at a delivery parking lot via the Tesla App, sign any remaining relevant paperwork that has been placed in their car, and return that paperwork to an on-site drop-off location prior to leaving.  This method provides additional convenience and comfort.

Our cash position at the end of Q4 2019 was $6.3B before our recent $2.3B capital raise. We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty. At the end of Q4 2019, we had available credit lines worth approximately $3B including working capital lines for all regions as well as financing for the expansion of our Shanghai factory.

For Tesla, as for everyone in these unprecedented times, it’s been a roller-coaster ride. For days, Elon Musk Tesla said the Fremont factory would remain open despite the Bay Area’s “shelter in place” order, as the company was an “essential business.” The Alameda County Sherrif’s Office thought differently, and said that the company could continue only “minimum basic operations,” which did not include building cars.

Tesla has clarified that employees who are sick, or simply don’t feel comfortable going to work, can take a certain amount of paid time off, and unpaid time off after that is exhausted, without penalty.

This is not the kind of disruption Tesla’s supporters like to see, and the timing could hardly be worse. The company is just beginning deliveries of Model Y, and was surely hoping for a big media splash and a smooth ramp-up to volume production. The debacle also coincides with the end of Tesla’s fiscal quarter (the quarter ends March 31, and the shelter in place order is to expire April 7). This is typically a time when the company rushes to deliver a lot of cars, in order to hit the quarterly numbers that keep the stock pundits writing good things.

There’s no consolation in the fact that every other automaker is also taking a huge hit from the coronavirus crisis. Just about every major auto plant has announced plans to suspend production (Electrek is maintaining an updated list of closings). Model Y will be far from the only new EV to see its launch delayed this year.

Meanwhile, in what GM CEO Mary Barra called “a WWII-style mobilization,” several automakers, including GM, Ford and Tesla, have offered to try manufacturing ventilators.

Elon Musk said Tesla “will make ventilators if there is a shortage.” He later elaborated: “Tesla makes cars with sophisticated HVAC systems. SpaceX makes spacecraft with life support systems. Ventilators are not difficult, but cannot be produced instantly.”

Source: Electrek

  • Steve

    “This batching policy is plainly not the most efficient way to run a production line, and Electrek’s Jameson Dow believes that it’s now making a bad situation worse”

    So now we are foregoing shelter in place and the greater good of society so a car company can keep operating business as usual? Time for a priority check.

    • Dave_SRQ

      The Fremont production facility is responsible for about 90% of their overall production. Keep in mind that I believe their only other production line (in China) was also shut down recently. If they can’t produce cars for 60 days, then they’re probably out of business. There’s no bounce-back for them in month #3. When I was a TSLA investor, I was worried about an earthquake or a fire at the Fremont factory. I never figured a pandemic would shut them down.

      With that being said, maybe they shut down anyway because it’s the right thing to do in the face of a pandemic. And then maybe the Federal government bails them out like they did for GM with taxpayer money? But this go-round, Tesla would have to get in the bailout line behind the cruise industry and the airline industry. I’m not sure the Feds are willing to print that much money.

  • Vincent Wolf

    Now more than ever before in our history we need to take this opportunity when oil shuts down nationwide due to prices dropping below what the oil can be extracted for and push hard to get the nation to keep those wells shuttered and install wind and solar and get this country going in the right direction of independence from oil.

    Otherwise this is going to happen again and again and again.

    This double whammy of an oil price war and CV-19 could be the event that breaks the hold of big oil on the world and forces it to move to renewables and save the planet from global warming and dependence on the greedy oil barons of the past 150 years.

    Tesla and Rivian will take a beating in the short term but they will come roaring back stronger than ever and dominate the industry to come.

    Ford, GM and Chrysler should not be offered bailouts.

  • Vincent Wolf

    Yep on a one-fourth production basis.