It’s not safe to reopen Tesla factory, Alameda County tells Elon Musk
Elon Musk aimed to reopen Tesla’s Fremont, Calif., plant Friday afternoon. At 1 p.m. Friday, Alameda County told him no, saying it wasn’t yet safe.
Tesla “must not reopen,” the county said in a statement. “Restoring all daily activities too soon risks a rapid spike in cases and would jeopardize the relative stability we’ve seen in our health and hospital system.”
Musk’s plan to reopen reportedly hinged on revised statewide guidance from Gov. Gavin Newsom, whose administration eased restrictions on manufacturing Friday. But counties are allowed to impose stricter rules.
Six Bay Area counties, including Alameda, barred nonessential manufacturing in a wide-ranging March 16 order. That order was modified slightly and extended to run at least until the end of May, but the local ban on nonessential manufacturing remains in place.
Alameda County said on Friday it informed Tesla that the company did not meet criteria established on May 4 for a gradual loosening of closure rules, though the county did not specify which criteria were not met.
As the county orders now stand, Tesla can’t start making cars at its Fremont plant until May 31.
Musk has not welcomed coronavirus-related public health orders.
He defied the original March 16 order until Fremont police pressed his company to close the plant. The company had argued that making electric vehicles was essential to national security, and kept the plant open several days before closing down on March 23. In a call with stock analysts, he described stay-at-home orders intended to slow the spread of the outbreak “fascist.”
As of Friday, Alameda County had reported 1,897 coronavirus cases and 69 deaths.
Local police departments are responsible for enforcing county orders. A Fremont police spokeswoman said via email Friday that “we have no indication or formal complaints that they are manufacturing vehicles today. ... It is our hope they will continue to comply with the health order.”
Tesla is eager to reopen the factory, which employs 10,000 people, most of whom are on furlough. Although Tesla reported a profit in this year’s first quarter, analysts expect dismal results for the current quarter. The entire automotive industry is in a bad way, with many showrooms closed and inventory piling up.
Lack of profit hasn’t yet proved a problem at Tesla. Even though the company has never earned an annual profit, its stock remains a high flier, trading above $800 for a market value of about $150 billion, far higher than other automakers.
But cash is an issue.
Although Tesla reported $8 billion in cash on hand at the end of March, it’s unclear how much the company has now. When asked during an April 29 conference call with analysts about the current cash balance, its chief financial officer declined to answer, and Musk launched into a polemic on American freedom and “fascist” government orders.
The company opened a new plant in Shanghai in December, which should provide some relief. That plant has been churning out cars but recently shut down for several days. Media in China reported a lack of essential car parts. Tesla did not respond to emails or phone calls seeking comment.
Cash generated through Shanghai production and sales in China might be insufficient to meet any cash crunch. That’s because Tesla has borrowed more than $1 billion from Chinese banks and its agreements with Chinese officials bar it from shipping cash to the U.S. until the debts are paid.
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