Coronavirus pushes Tesla to suspend production at its Fremont factory

Tesla Inc. (NASDAQ:TSLA) is the latest to announce a temporary halt of operations amidst the Coronavirus pandemic that is disrupting global businesses. On Thursday, the U.S electric car manufacturer said production at its factory in San Francisco Bay Area will be suspended on March 24^th.

While production at Tesla’s Nevada battery factory is likely to continue, the temporary shutdown, according to the company, will also apply to its NY-based solar roof tile factory.

Following the announcement, Tesla was reported trading 8% down in the stock market in extended trading on Thursday.

Tesla Says Operations At Its Shanghai Gigafactory Are Running Normally

Tesla had previously declared plans of increasing production of its new sports utility vehicle, Model Y, the demand for which, as per CEO Elon Musk, is likely to be higher than for all Tesla vehicles combined. With the flu-like virus pushing for production halt, however, Tesla’s Model Y is now expected to take a hit.   

In China, on the contrary, Tesla said that its Shanghai Gigafactory is still operational. The £1.71 billion factory started producing Model 3 in December. The Gigafactory is an imperative component of Tesla’s strategy for sustained growth with CEO Musk planning on widening its production capacity.

Tesla’s representative in Shanghai recently highlighted that the production rate at the Gigafactory has topped pre-virus levels. More than 91% of Tesla workers, the representative added, resumed operations on March 6^th.  

According to China Passenger Car Association (CPCA) secretary-general, Cui Dongshu, sales for Tesla vehicles surged to 3,900 in February from 2,620 that was recorded in January.  

Tesla’s announcement on Thursday also reiterated that the company has sufficient liquidity to survive the Coronavirus driven market uncertainty. At the end of Q3, Musk said the company has £5.40 billion in cash excluding the recent £1.97 billion capital raise.

Tesla Says Workers Will Receive Full Pay During The Operations Halt

Complying with the state order of suspending business to minimize the fast transmission of the fatal virus, Tesla said that minimum basic operations will continue at its Fremont factory to support charging infrastructure and vehicles or other relevant energy services.

The electric car maker also said that its employees will continue to receive full pay during this time.

Other prominent U.S automakers including Fiat Chrysler, General Motors, and Ford Motor, also suspended operations in their U.S, Canada, and even Mexico based production factories earlier this week.

The Coronavirus crisis has weighed heavily on Tesla in the stock market that has lost around 60% since its high of £780.0 per share on February 19^th.