Tesla’s 2 U.S. plants shut down due to outbreak, cash flow is enough to survive 5 quarters

On March 19, Tesla announced that its Fremont-based auto plant would be temporarily shut down after March 23. However, it will continue to be a fundamental business to support Tesla’s automotive and energy services and charging infrastructure. In addition, Tesla’s solar panel plant in New York will be suspended, but will also retain the necessary services, including the supply of basic components.

However, other plants, including the Nevada battery plant, and Tesla’s super-charging network will continue to operate.

Tesla's 2 U.S. plants shut down due to outbreak, cash flow is enough to survive 5 quarters

Star products difficult to enemy outbreak

Tesla’s electric car plant is one of the first to stop the new crown outbreak from worsening, with the state government deciding to shut down all non-essential businesses.

Elon Musk, who had just welcomed Model Y’s early delivery, would have decided to let the Fremont plant continue to operate at the risk of the outbreak.

However, the arm eventually failed to slit, And After “struggling” with some time, Tesla decided to suspend production at the Fremont plant on the 24th.

Late Tuesday U.S. time, the official account of the Alameda County Sheriff’s Office in California said on Twitter that Tesla’s Fremont plant “is not an important business defined by the county and that Tesla can only maintain a low base at best.” “

Ray Kelly, a spokesman for the sheriff’s office, noted that the so-called minimum basic operations here refer to labor and human resources departments, equipment maintenance, etc., and that the assembly line is not in place.

Even Musk’s own Twitter account, which has never described the operation of the Fremont plant, simply tweeted last week that “it’s silly to panic because of the new corona virus.” “

Musk said in an email to all employees Monday that he would approve the outbreak if he wanted to stay at home, but production at the Fremont plant would not stop, the Los Angeles Times reported.

“Frankly, I think the fear of the new coronavirus is more dangerous than the virus itself. Iron Man wrote in the email. In the e-mail, he also predicted that the number of new coronavirus infections would not exceed 0.1% of the U.S. population.

“I’ll continue to work, but it’s just my personal choice. Musk wrote. “If you don’t feel safe to work in a factory, you might as well choose to stay at home. “

Video released by the Los Angeles Times shows the parking lot at the Fremont plant continuing to fill up Tuesday, U.S. time, and commuter buses full of employees running as usual. The Fremont plant, the largest on the West Coast, is responsible for producing four of Tesla’s electric cars, while the new star product Model Y only officially delivered this week.

The latest news from U.S. time on Wednesday showed that Tesla has moved, leaving only 2,500 employees at the Fremont plant to continue working, compared with at least 10,000 on normal working days.

However, this number is still not low, and once an outbreak is outbreak, it is prone to concentrated transmission.

“It seems to me that Tesla is still not operating on the minimum basis as required,” said Kelly, a spokeswoman for the sheriff’s office. “

“Your day-to-day assignment sits unchanged, and if you’re in an important position, such as production, service, delivery, testing, and after-sales teams, you should continue to work,” Tesla’s human resources department said in an email.

Clearly, these important positions that require continued work do not meet the requirements of the sheriff’s office.

Things changed again on Thursday, U.S. time, and Tesla was soft under government pressure. The company announced that its Tesla Fremont and New York plants will be temporarily closed from the 24th of this month.

However, the Nevada Super plant, which is responsible for battery production, will continue to operate, with Tesla retail stores, service centers and hypercharge stations all on a regular basis.

In fact, it’s not just Tesla that’s affected by the outbreak, and now all of America’s three major North American plants are out of production.

On March 18th the American Automobile Federation called for the closure of the U.S. plants of Detroit’s three major automakers, General Motors, Ford and Fiat Chrysler, to prevent employees from contracting the new corona virus.

Later, Ford said in a statement that it would suspend production at its North American production site by March 30, thoroughly clean the facilities to protect employees, and strengthen the prevention and control of the COVID-19 coronavirus.

GM also said in a statement that it would remain closed until at least March 30. In addition, the FCA will also remain suspended until the end of this month.

In addition, Honda, Toyota and other automakers are preparing to shut down their North American plants.

The global auto industry has been hit hard as domestic and foreign auto companies have suspended production.

Tesla not worried about re-discontinued

Tesla currently has three super factories in the U.S., including the California plant that makes the entire vehicle, the State of California plant that makes the battery, and the New York plant. The California and New York plants have announced successive shutdowns.

Tesla will continue to deliver vehicles during the shutdown.

The company said it was using its app and car’s smartphone connectivity feature to implement “contactless delivery” in “many locations” to help reduce the spread of the virus. With contactless delivery, “customers can unlock the new car in the delivery parking lot through the Tesla App, sign all other relevant instruments that have been placed on the car, and then return the instruments to the spot before leaving,” Tesla said.

In short, Tesla has switched to a “contactless” service to minimize the risk of infection between users and employees.

In a letter to employees, Tesla also said that $6.3 billion in cash on the company’s account at the end of Q4 last year, combined with the recent $2.3 billion in new financing, would make it through a difficult period of uncertainty.

Morgan Stanley also confirmed Tesla’s financial position, saying the electric giant would not be in crisis because of the shutdown, even if it was about to stop for months.

Still, Damore cut Tesla’s target price ($480-$460) because of delivery issues in the outbreak.

New Street analyst Pierre Ferrago also believes that Tesla won’t stop because of the outbreak, and that even if Fremont stops, they’re having enough cash flow for Tesla to live for five quarters.

On the Chinese side of the factory, the landscape is unique.

Tesla has pulled workers from its German super plant under construction back to the U.S., and Tesla’s Shanghai plant has been successfully reopened. On March 18, more than 30 people from the Shanghai Working Group of the State Council, the Shanghai Municipal Government, and the Shanghai Free Trade Pilot Zone’s Lingang New Zone Management Committee went to Tesla’s Shanghai Super Factory yesterday to conduct a re-production research.

Tesla’s Shanghai plant resumed production on February 10, making it one of the first major auto companies in China to start re-production.

Tesla Vice President Tao Lin said the Shanghai Super plant’s production capacity has rebounded rapidly since it resumed, has exceeded pre-epidemic levels and will accelerate its goal of producing 150,000 vehicles a year by 2020.

Since the outbreak worsened, Tesla’s share price has been “knocked back” in four stock market meltdowns. Tesla finally stopped falling to close at $427.64, following the U.S. government’s aggressive rescue policy.

In an effort to contain the outbreak as quickly as possible, Alameda County, along with San Francisco and Santa Clara, issued a “take-in” order on June 16, requiring a complete shutdown of non-essential businesses other than grocery stores, pharmacies, medical facilities and other vital services, which will last for three weeks.

Despite the escalating outbreak in the U.S., Tesla is under pressure not only to keep its factories running, but also to “pressure” from local governments.

For Tesla, and even for all car companies, the 2020 car market environment will be even more difficult.

Because, the policy environment, the market environment, and even the consumer psychology, there are all possible in an instant to change dramatically.