As COVID-19 has been wreaking havoc on the world many companies have been forced to halt the production of their products to help preserve the safety of their employees. While Tesla had tried to carry on, they recently announced that they would be suspending production in two of their factories starting March 24th.
The news came through a press release that the automaker released yesterday. While Tesla had tried to have their Freemont factory exempt from county and state restrictions regarding shelter-in-place they were not able to win that battle.
Tesla will be closing its Freemont factory and Gigafactory 2 in an “orderly fashion” as an explanation for why it isn’t being done immediately.
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.
As stated they will not be completely shut down and there will presumably be minimal personal to support their current services. Gigafactory 1 in Nevada will still be operating at its normal capacity, at least until Nevada enacts a policy similar to California, but it’s possible that might not end up happening. This means that the powertrains for Tesla’s cars will still be built, so it’s not exactly a full stop in production.
Since the release of that press release, California has issued a state-wide stay-at-home order for non-essential personal and workplaces, so we’ll see if the Freemont factory will continue to stay open up until the 23rd.
In other news, Tesla has also made efforts to make the delivery experience “touchless” and will allow you to take delivery of the car through your app by walking up to the car on the parking lot and signing any remaining documents on your phone, without any interaction whatsoever.
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.
Lastly, the press release touched upon Tesla’s financial situations as the markets continue to tumble into uncertainty. Thankfully the company has amassed quite a large sum of money that they say will allow them to stay afloat for the for an extended period.
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.
Tesla will most likely face backlash for not having their factories close down under orders from the state government, especially when GM and Ford have suspended production themselves. One look at Musk’s twitter will show you that he is not in full panic-mode when it comes to the virus. Whether or not that belief is warranted is still left to be seen as the virus is nowhere close to finishing spreading through the United States.
What do you guys think of the decision? Let us know down in the comments below.