Tesla has been reluctant to close the only U.S. car assembly plant after the San Francisco Bay area issued a "local asylum order" due to the outbreak. Bloomberg said,During this time, Tesla struggled with the government's orders, and repeatedly repented, and finally had to close the factory. Behind Tesla's efforts to keep its U.S. plant operating is the pressure on the company to deliver cars.
Tesla Fremont factory
According to documents obtained by Bloomberg through the California public records application, Tesla's only U.S. automobile assembly plant continued to operate for several days in defiance of the San Francisco Bay Area's "local asylum order", posing a public health risk.
calif.-fermon city (Fremont) officials told tesla in a series of conversations for several days that its factory was not considered a required business, so tesla needed to follow the "local asylum order" issued by alameda county on march 16. Tesla subsequently announced on March 19 that it would suspend production after 4 days.
The documents reveal in more detail the days long dispute between Tesla and the local government. Tesla seeks to maintain the plant's operations, citing the federal government's definition of critical infrastructure. Prior to Tesla's concession, the chief of police, assistant city manager, Alameda County Health Officer and Assistant Legal Counsel were involved in the dispute. Tesla has yet to comment.
San francisco bay area is the first u.s. area to issue a "local asylum order ", this huge epidemic prevention and control efforts affected more than 7 million people. Since then, the new crown virus has been raging in American communities, putting a lot of pressure on the global economy. According to data released by the health department of alameda county, as of tuesday, there were 294 confirmed cases of new crown virus in alameda county, and seven people died.
Government meeting on Tesla
A few hours before Tesla announced plans to suspend production, police chief Kimberly Petersen (Kimberly Petersen) and other city officials held an online meeting on March 19 to follow up on the decision made the day before:Tesla must stop all activities except minimum basic operations.
peterson wrote to tesla on march 21, saying the city of felimon worked to clarify whether tesla was a required business and consulted scott dickie (Scott Dickey), assistant legal adviser to alameda county. Diki relayed the decision of Alameda County Health Officer Erica Pan (Erica Pan).
Alameda County does not see Tesla as a required business
"Dickie informed city officials that Dr. Erica Pan did not see Tesla as a necessary business, but as a manufacturing plant that could become a public health hazard ." Peterson said in his letter.
Tesla's Freemont plant employs about 10000 people, but many workers commute to Freemont from other places, including the Central Valley of California. Tesla informed employees last week that the two employees had been diagnosed with the new coronavirus, but did not indicate which office they were working in.
Agree to close the plant in stages
tesla representatives met with felimon officials on march 19, including the senior director of tesla policy and business development, rohan patel (Rohan Patel), who had worked in the obama administration. At the time, tesla said the company intended to comply with the "local asylum order ", although it needed to" phase out the factory ".
Both parties agree that all car manufacturing at Tesla's Freemont plant will stop on March 23, and employees who are still at the plant will complete the closing of the assembly line to protect the value of cars and batteries. Other employees maintain basic operations such as security, maintenance and cleaning, all of which need to follow social alienation requirements.
"You have clearly agreed with this understanding," Peterson wrote later“These activities will be allowed if you want to switch to production of respirators or other devices to fight the new coronavirus. "
Musk said he would make a ventilator
The day before Tesla representatives met with Felimont officials, Tesla CEO Elon Musk (Elon Musk) tweeted on March 18 that the company would produce ventilators if there was a shortage of ventilator supplies. Since then, tesla has consulted with the well-known ventilator manufacturer medtronic, but there is no indication that tesla will play a role in the ventilator manufacturing process.
At another network meeting on march 22nd, tesla once overturned the decision to close the factory. tesla acting general counsel alan Alan Prescott argues that the alameda county health directive has been replaced by a statewide new directive issued by california governor gavin newson (Gavin Newsom). According to newson's directive ," critical infrastructure areas "will be exempted. Tesla believes that this area includes the company's factory, so the company can continue to operate fully.
Peterson told Tesla at the meeting that officials in Freemont would not accept the plea and Tesla would have to phase out operations because it was "the right thing to do.".
Musk tweeted two days ago suggesting that Tesla had no choice but to keep the plant running because its parts suppliers could not.
Peterson told Tesla that she would arrange an inspection of Tesla's plant on March 24 to ensure Tesla complied with the instructions.
"In conclusion, I would like to reiterate that the city of Fremont attaches great importance to Tesla as a partner and thanks you for your contribution to our economy and community," Peterson said in an email to Tesla. "We are very grateful to you for your willingness to take public health as a top priority and cooperate with us in fighting the spread of the new crown virus."
At the end of each quarter, Tesla will do everything it can to improve delivery. At this time, musk often issues mobilization orders to encourage employees to deliver as many cars as possible to customers.
But in March, the strategy may not work. Tesla's car delivery capabilities have been limited by "local asylum orders" and social alienation policies around the world. Despite mask's attempts to save the quarter with a "no touch" delivery option at selected locations, the new coronavirus pandemic is expected to severely dampen market demand for all automakers.
On average, analysts expect Tesla to deliver about 77400 vehicles worldwide in the first quarter, including the model y crossover that has just begun to be delivered. Although this is better than the disappointing delivery volume in the same period of last year, it is more than 30% lower than the record delivery volume in the fourth quarter of last year.
"Tesla generally delivers a disproportionate number of cars in the last two weeks of each quarter ," Morgan Stanley analyst Adam Jonas (Adam Jonas) said in a Monday report ." Given the disruption in production and logistics, we need to be prepared for a weaker delivery data ."
Tesla Q1 vehicle delivery forecast
Jonas expects Tesla to deliver 88000 cars in the first quarter, the most optimistic of the six analysts surveyed by Bloomberg. He warned that there was a "downside risk" to this expectation. He expects investors to focus in the next few days on demand developments in the second quarter, Tesla's money burn and the battery day event that musk promised in April.
Long before the outbreak of the new crown virus, Musk warned in July last year that the first quarter of this year would be "tough ". tesla CFO zakari kokhorn (Zachary Kirkhorn) should also echo this view at the fourth quarter conference call at the end of january, noting that the auto industry is always subject to "seasonal influences ".
Although Tesla released an encouraging forecast in January that it would deliver more than 500000 vehicles this year, it said at the time that it was "in the early stages of understanding whether the epidemic is likely to have a temporary impact on the company and how much impact it has".
In addition to the US plant, Tesla's Shanghai plant has resumed operations with the assistance of the local government. Tesla generally does not release vehicle delivery data by country or region.
"Given the closure of Chinese factories in February, the likely slow pace of production in March, and the closure of American factories in March, we expect everyone to give terrible expectations ," Morningstar analyst David Weston (David Whiston) said in an email ." China and the United States accounted for 64% of Tesla's annual revenue last year, so the crash here will be painful ."
In the middle of February, Tesla's shares closed up 112% higher this year, and at one time, with the sharp fall of the stock market, all the gains in 2020 were vomited back. As of Tuesday's close, Tesla's shares have risen 25% this year.