Tesla Opens its California Factory, Defying Local Orders to Keep it Closed Due to the Coronavirus
【Summary】Tesla’s electric vehicle factory has been shut down since March 23 and thousands of its employees were furloughed due to the coronavirus pandemic. But Tesla Chief Executive Elon Musk wants it to reopen ASAP. So much so, that Musk is defying a county-wide order for the factory to remain closed. The plant was operational on Monday in direct violation of the local shelter-in-place orders.
Electric automaker Tesla has only one U.S. factory in Fremont, California. With the exception of Tesla's new factory in Shanghai that went online late last year, the Fremont factory has built all of Tesla's vehicles since it opened in 2012.
However, due to the ongoing coronavirus pandemic, the Tesla's electric vehicle factory has been shut down since March 23 and thousands of employees were furloughed. But Tesla Chief Executive Elon Musk wants it to reopen ASAP. So much so, that Musk is defying a county-wide order for it to remain closed.
Tesla's Fremont factory was reopened today and the building parking lot was reported to be full of cars as of Monday morning. The factory employs around 10,000 workers, but its not clear how many have returned to work.
In an email to Tesla employees viewed by Reuters, The company wrote, "We're happy to get back to work and have implemented very detailed plans to help you keep safe as you return."
"Furlough Has Ended And We Are Back To Work in Production!"
Tesla referred to an order on Thursday by California's governor allowing manufacturers to resume operations and said that as of Sunday, previously furloughed employees were back to their regular employment status.
Tesla's feud with Alameda County, where the plant is located, has been brewing since last Thursday, a day after California Governor Gavin Newsom announced that he was allowing some manufacturing to resume in the state. However, Governor Newsom's directive does not override any local county shelter-in-place orders, some of which are stricter.
Shortly after Governor Newsom's announcement, Musk said that the Tesla factory will reopen on Friday afternoon, although its wasn't allowed to due to Alameda County's order for it to remain closed, which frustrated Musk.
Alameda County, where Tesla's factory is located, as well as the surrounding counties in the San Francisco Bay Area, was one of the first regions in the country to issue mandatory shelter-in-place orders and the shutdown of all "non-essential businesses" to prevent the spread of the virus. The orders essentially shut down the entire city of San Francisco and the surrounding cities.
The order was once again extended earlier this month and remains in effect until May 31, unless its updated.
In March, Tesla argued unsuccessfully that its vehicle production was an essential business and fought to keep the plant open despite the county order, but ultimately decided to shut it down on March 23 over safety concerns.
In a statement on March 19, Tesla wrote, "Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers."
The mercurial head of Tesla sent a series of angry tweets over the weekend expressing his frustration that the factory is being forced to remain closed, but Musk's growing frustrations over the shelter-in-place orders began surfacing two weeks ago. On April 30 during Tesla's Q1 earnings call, Musk called the coronavirus lockdowns "fascist."
California, as well as other states, are slowly making plans to safely start reopening their economies without jeopardizing the health of employees. The economic downturn as a result of the coronavirus crisis has put millions of American out of work and has led to the highest number of new unemployment claims since the 1930's.
Health officials in Alameda County, said on Friday and Saturday that Tesla's factory must remain closed as long as local lockdown measures to curb the spread of the coronavirus remain in effect.
Musk threatened to leave California and move Tesla's factory to Texas or Nevada over the fight.
Some of the first documented coronavirus cases in California were in neighboring Santa Clara County, where the county reported 2,339 cases and 129 deaths since March. Alameda County reported 2,064 coronavirus cases and 71 deaths over the same period.
Tesla's stance on reopening was heard in Washington DC. On Monday, U.S. Treasury Secretary Steven Mnuchin said California should do whatever is necessary to help Tesla reopen its only U.S. vehicle plant if it wants to keep the company in California.
"California should prioritize doing whatever they need to do to solve those health issues so that he can open quickly and safely or... he's moving his production to a different state," Mnuchin said in a CNBC interview.
California Governor Gavin Newsom on Monday said he spoke to Musk several days ago and his concerns helped prompt the state to begin its phased reopening of manufacturing last week.
"I have not only known that company but I have known its founder for many, many years," Newsom said in his daily coronavirus press briefing. "I have great reverence for their technology, for their innovative spirit, for their leadership."
In addition to Musk's angry tweets. Tesla on Saturday sued Alameda County, accusing it of violating California's constitution by defying Newsom's orders on Thursday allowing manufacturers to reopen. Alameda County did not respond to requests for comment. However county officials released a statement on May 9 addressing the situation with Tesla.
"The Alameda County Health Care Services Agency and the Public Health Department have been communicating directly and working closely with the Tesla team on the ground in Fremont. This has been a collaborative, good faith effort to develop and implement a safety plan that allows for reopening while protecting the health and well-being of the thousands of employees who travel to and from work at Tesla's factory."
Musk's threat to leave California has prompted a county judge in Texas to try and lure the automaker away. The judge, Richard Cortez, reached out to Musk on Twitter saying his county is ready to accommodate the automaker that is worth more than U.S. automaker General Motors and Ford Motor Company combined with a market cap of $150 billion.
Cortez even invited musk to visit the Lone Star State.
"We have a motivated, pro-business governor," said Richard Cortez, county judge of Texas' Hidalgo County. "What we no longer have is a shelter at home mandate."
Musk responded in a tweet, "Note is much appreciated."
Tesla's Fremont, California factory was forced to close just as deliveries of the long-awaited Model Y crossover had begun. The Model Y is one of Tesla's most important vehicles for the company to maintain its profitability. Tesla just reported three consecutive profitable quarters, the first time in its history.
Musk said that the Model Y has the potential to outsell all of Tesla's other models combined. Now Tesla just needs its factory open again so it can resume production.
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