- In light of the coronavirus, Tesla will shut down production at its Fremont plant in California at the close of business on Monday.
- Tesla’s plant was deemed a non-essential business so it can only in “minimum basic operations.”
- Tesla will reportedly use the forced shut down to make factory upgrades.
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With the entire state of California still on lockdown because of the coronavirus, only essential operations are allowed to remain functional. As such, the only places of business that are allowed to remain open in the state include grocery stores, banks, gas stations, pharmacies, and laundromats. For a while, though, it seemed as if Tesla would be able to keep production at its Fremont plant in California running at full throttle, in spite of the order.
Tesla’s brazenness in this regard probably shouldn’t come as much of a surprise given some of Elon Musk’s recent statements regarding the virus. Recall, the Tesla CEO a few weeks ago called the coronavirus panic “dumb,” and subsequently said that “the harm from the coronavirus panic far exceeds that of the virus itself.”
Ultimately, Tesla late last week finally announced its plan to shut down production at its Fremont plant amidst a tornado of criticism. Production will specifically come to an end at the end of business on Monday in order to make for an “orderly shutdown.”
Though production will grind to a halt come Tuesday, the company is allowed to continue “minimum basic operations,” an umbrella category that includes the following per the Alameda County Public Health Department:
- The minimum necessary activities to maintain the value of the business’s inventory, ensure security, process payroll and employee benefits, or for related functions.
- The minimum necessary activities to facilitate employees of the business being able to continue to work remotely from their residences.
So where does that leave Tesla? Well, according to a report from Electrek, Tesla plans to use the mandatory shutdown to implement factory upgrades and improvements that, if all goes according to plan, will make production that much more efficient once the state finally gets a handle on the coronavirus.
The report reads in part:
The company can still use a small workforce at the factory and it plans to make upgrades to its production lines.
At the Fremont factory, Tesla was already planning some major expansions to increase its Model Y production capacity.
Tesla’s plans in this regard seem to be far more ambitious than the “minimum basic operations” allowed by the state, so it will be interesting to see how this all plays out.
Incidentally, Tesla in a press release last week said that it has enough cash on hand to withstand the coronavirus pandemic.
“Our cash position at the end of Q4 2019 was $6.3B before our recent $2.3B capital raise,” Tesla explained. “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.”