Tesla to temporarily shut down Fremont factory

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 and sparked a public tussle between the automaker and local officials over what was consider 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, New York 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.

@tesla will suspend production during the health order. Minimum basic operations are permitted. https://t.co/GZtcBOHPHC

- Alameda County Sheriff (@ACSOSheriffs) March 19, 2020

Meanwhile, the company's massive factory near Reno, Nevada 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.

Tesla said it has enough liquidity to weather the shutdown caused by the COVID-19 pandemic. Its cash position at the end of the 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 that 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.