Tesla to temporarily shut down Fremont factory

Kirsten Korosec

Tesla will suspend production at its Fremont, Calif., factory beginning March 23, days after a shelter in place order went into effect in Alameda County due to the COVID-19 pandemic that sparked a public tussle between the automaker and local officials over what was considered an "essential" business.

Some basic operations that would support Tesla's charging infrastructure and what it describes as its "vehicle and energy services operations" will continue at the factory, which under normal circumstances employs more than 10,000 people.

Tesla will also suspend operations at its factory in Buffalo, N.Y., except for "those parts and supplies necessary for service, infrastructure and critical supply chains," the company said in a statement.

Tesla could not be reached for comment. TechCrunch will update the story if the company responds.

The Alameda County Sheriff also confirmed the announcement, noting in a tweet that Tesla would suspend production during the health order and that minimum basic operations are permitted.

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Meanwhile, the company's massive factory near Reno, Nev. is still open and operational as usual. The Nevada gigafactory, as Tesla describes it, employs thousands of people who produce electric motors for the Model 3 and battery packs for its portfolio of electric vehicles. People familiar with operations at the gigafactory told TechCrunch that managers are monitoring the situation closely.

Tesla said it has enough liquidity to weather the shutdown caused by the COVID-19 pandemic. Its cash position at the end of the fourth quarter was $6.3 billion before its recent $2.3 billion capital raise.

"We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty," Tesla said.

The company had available credit lines worth about  $3 billion, including working capital lines for all regions as well as financing for the expansion of its Shanghai factory at the end of the fourth quarter of 2019.

The announcement caps an uncertain week that began March 16 after Alameda County ordered all nonessential businesses to close, including bars, gyms and dine-in restaurants because of the global spread of COVID-19, a disease caused by the coronavirus. Tesla’s factory and a number of its other facilities are located in and around Fremont, which is within Alameda County.

Tesla kept the Fremont factory open despite the order, claiming that part of the company’s operations fell under an exemption in the county’s order. Tesla CEO Elon Musk told employees in an email that the company would continue operations at the Fremont factory, where the automaker assembles the Model S, Model X, Model 3 and now Model Y electric vehicles. Musk did tell employees they should not feel obligated to come to work if they “feel the slightest bit ill or even uncomfortable."

The Alameda County Sheriff disagreed, and on March 17 tweeted that Tesla was not "essential." The automaker still ignored the order and the sheriff's tweet. On Wednesday, employees received another email from human resources head Valerie Workman that the Fremont, Calif., factory was still open for production, because it has had “conflicting guidance from different levels of government.”

The email told employees to come to work if their job is to produce, service, deliver or test its electric vehicles. Another email sent late Wednesday evening (and viewed by TechCrunch) reiterated to employees that the factory would remain open to "essential" workers, but special efforts were being taken to lessen the spread of COVID-19, including handing out masks to be worn throughout the day, taking temperatures prior to entry, 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.

Here's a portion of the statement:

In the past few days, we have met with local, state and federal officials.  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.  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.

Tesla also said that it will start “touchless deliveries” in many locations to allow customers to take delivery of their vehicle "in a seamless and safe way."

The vehicles will be placed in a delivery parking lot. Customers will be able to unlock the vehicles using the Tesla app and then sign the remaining paperwork necessary to take ownership. Customers will need to return that paperwork to an on-site drop-off location prior to leaving, Tesla said.

Workers prep for deliveries

As Tesla winds down the Fremont factory, the activity is shifting to its delivery operations. Tesla has a history of stacking deliveries at the end of a quarter. And this one is no different, COVID-19 or not.

Current Tesla employees have told TechCrunch that communication about operations in California, one of its biggest markets, has been inconsistent and unclear as the COVID-19 pandemic has spread. Employees, who requested anonymity for fear of losing their jobs described a lack of access to disinfectant, and said there were not clear or proper protocols put in place to safeguard workers in sales, service and delivery.

The lack of guidance for Tesla employees who work in delivery and sales throughout the U.S. has prompted some to take matters into their own hands because there is "zero protective gear."

Employees told TechCrunch there is no disinfectant or gloves for delivery drivers, service or sales staff at some of its busiest delivery hubs. There has been little communication with upper management even as they prepared for an onslaught of vehicles before the quarter ends. For instance, employees were told to expect 1,000 cars in Costa Mesa alone in the next three days. Other delivery hubs are expected to be busy as well.

The touchless delivery system began Wednesday in places like Costa Mesa. Some employees are worried about the risk of exposure to COVID because customers are still walking into locations because touchless delivery isn't possible in all cases because of trade-ins and other reasons, such as financing.