By on March 19, 2020

tesla factory fremont, Image: Tesla Motors

Tesla has earned no shortage of criticism for being the only American manufacturer yet to suspend production as a result of the coronavirus pandemic. Rather than enact a full-blown shutdown, the California-based automaker opted to reduce its active workforce to just 2,500 employees — about a quarter of its total strength.

Six counties in the San Francisco Bay Area have issued a “shelter-in-place order” aimed at curtailing the spread of the novel coronavirus. Tesla’s Fremont facility is located in Alameda County — one of the municipalities telling residents to stay in their homes and close all nonessential businesses. Noticing that the factory had failed to comply with the notice, the Alameda County Sheriff’s Office tweeted out that Tesla was “not an essential business as defined in the Alameda County Health Order.”

But we’re not even sure what the company is legally obligated to do. 

The Alameda County Sheriff’s Office ended its message by saying the business can still “maintain minimum basic operations per the Alameda County Health Order.” Digging into the referenced document, we learned the following from Section 10:

For the purposes of this Order, “Minimum Basic Operations” include the following, provided that employees comply with Social Distancing Requirements as defined this Section, to the extent possible, while carrying out such operations:

i. The minimum necessary activities to maintain the value of the business’s inventory, ensure security, process payroll and employee benefits, or for related functions.

ii. The minimum necessary activities to facilitate employees of the business being able to continue to work remotely from their residences.

It sounds as though Tesla has a bit of leeway in terms of how it can run things amid the health crisis, though the order also stipulates that failures to comply with the rules are a misdemeanor and could be met with a fine, imprisonment, or both. Considering the way the Bay Area’s shelter-in-place order has been covered in the media, you’d be forgiven for any confusion.

Bloomberg recently published an opinion article suggesting there were no legal implications involved with health orders in California (before detouring rather quickly into what constitutes martial law). Meanwhile, local outlets frequently discuss the situation as if all rules are mandatory — which may be true, depending on the how local authorities handle things. But the longer Tesla resists, the more articles pop up asking what penalties the automaker will incur.

Even the history of the term “shelter in place” doesn’t offer much help. All previous instances where the phrase is used references it as a warning — not an order — and most seemed to have taken place within California over the last decade. That’s an important distinction. The term “warning” implies the expectation of compliance without ramifications, the term “order” does not.

According to the LA Times, Tesla is sticking with the narrative that there has been conflicting guidance coming from the federal government. It also seems to view itself as an essential business. “People need access to transportation and energy, and we are essential to providing it,” explained Tesla HR boss Valerie Capers Workman. The article has since been updated several times (obnoxiously, without indicating changes in new drafts) but manages to paint the clearest picture of the situation thus far.

Elon Musk’s opinion seems to be that fears of the pandemic are overblown. On March 6th, he tweeted out that “the coronavirus panic is dumb.” This week, he told his workforce that he’d rather they stay home if they were genuinely afraid (or sick) while suggesting the virus wouldn’t surpass 0.1 percent of the population. “I will personally be at work, but that’s just me,” he said in an email to staff.

His opinion might have something to do with Tesla’s financial situation. The company’s stock has shed over half its value since February 21st. Thanks to an investment round earlier this year, the company should have a few billion in reserve to weather a temporary shutdown. Still, that likely won’t matter if the entire country stays closed for more than a couple of months. Chinese auto sales were down 80 percent in February vs the previous year. But COVID-19 also spread through the region unchecked for at least a month, suggesting the U.S. might fare better under aggressive countermeasures — though perhaps not so aggressive as China implemented (human rights and all that).

I’m not defending Tesla; I accused the entire company of theft less than 24 hour ago, but the rules surrounding these public health orders exist in a gray mist nobody seems capable of navigating. It may be because there’s been no precedent for something like this since the Spanish Flu took the world by storm in 1918. Ideally, everyone does their part to avoid spreading the virus, though it’s not surprising to see pushback from parties concerned about their bottom line — especially since the rules are foggy and could upend one’s business.

Alameda County spokesman Ray Kelly said Wednesday that the company had again been informed that it can no longer continue operations as usual. “Tesla is not going to decide what the law is,” he said before adding that the Fremont Police will handle enforcement of the county’s health mandate. It looks like the department is working with both “the Alameda County Public Health Department and Federal Government to better understand and interpret their guidelines in the face of a variety of other state and federal regulations.”

So it doesn’t seem to know the rules, either.

[Image: Tesla]

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28 Comments on “Does Tesla Have an Obligation to Close the Fremont Plant?...”


  • avatar
    R Henry

    Ours is a unique moment in time.

    Local, State, and Federal authorities are behaving erratically, often without full legal jurisdiction or precedent. That an independent firm led by a visionary maverick chooses to resist against the bumbling authorities is not a surprise.

    I think we should all bring out those old “Question Authority” tee shirts. There is a lot happening right now–much of it appropriate, some of it less so.

    • 0 avatar
      hreardon

      “Local, State, and Federal authorities are behaving erratically, often without full legal jurisdiction or precedent.”

      From where I sit, it’s completely the opposite. The State of Ohio has done an outstanding job educating, planning, and rolling out protocols in a pretty seamless manner with local officials.

      At the federal level: the feds are operating as they always do. Emergency response in the US has always been setup to be a state and local matter, and when the feds are called in, it is for coordinating support and emergency legislation to facilitate the response. There is nothing new here.

      Yes, this does require a coordinated response, and the feds should have moved faster. That said, my local community is doing an outstanding job, and from where I sit, the feds would probably only make things worse.

      • 0 avatar
        ToolGuy

        Had some personal involvement with a natural disaster several years back. The city response in the first few days was fairly reasonable. The state response a few days later got worse. When the feds showed up, it went to a whole new level of stupid.

    • 0 avatar
      dal20402

      It has been settled since shortly after our republic was founded that the states have police powers that allow them broad latitude to respond to emergencies. They can delegate, and in most places have delegated, some of those powers to local health authorities. There is zero question among anyone informed about the authority of the state and local governments in the Bay Area to issue these orders.

      Elon Musk has done some visionary things, but he also has more history of acting like an idiot than most people, and right now he is acting like an idiot.

    • 0 avatar
      bd2

      “Local, State, and Federal authorities are behaving erratically, often without full legal jurisdiction or precedent. That an independent firm led by a visionary maverick chooses to resist against the bumbling authorities is not a surprise.”

      – Totally the opposite.

      It’s been the Feds who have bungled things from the beginning, along w/ a no. of states (such as Texas which hasn’t acted and is leaving things up to the cities and municipalities).

      Only thing Musk cares about is keeping Tesla shares price up.

      Henry Ford was also a “visionary maverick,” but he was also known to be a fervent anti-semite and a bully to his own children.

    • 0 avatar
      PandaBear

      I think you need some skin in the game before you can say that. If your 70 year old mom and dad are the one going around right now and taking risk, that’s your business. I don’t want you to get close to me or my parents, and since people like you wont listen, we have local authorities to get you to do the right thing via citations. Talk to the judge if you want to appeal that $400 fine.

      Don’t like it? Vote them out, but my guess is there are more who disagree with you at the moment.

  • avatar
    SCE to AUX

    Tesla should comply with the Sheriff’s order.

    Essential, my foot.

    As with Hyundai, it will only be a matter of time before one of their workers gets sick, and the whole thing shuts down anyway. Besides, I can’t see how Tesla’s supply chain can remain intact for much longer.

    They’re just worried about paying 30k workers who aren’t working. Get in line, Tesla – it’s bad for everyone.

    • 0 avatar
      hreardon

      Musk is doing what Musk does: rolling the dice.

      He’ll be forced to shut down the moment the first employee tests positive, and the backlash against him will be pretty intense for it.

      • 0 avatar
        probert

        Not sure he’s a dice roller. It should be noted that he has offered extended paid sick leave to any employee who feels ill. Some companies like McDonalds are fighting any federal initiative along these lines, and Bezos has taken things to a new level of cynicism.

  • avatar
    redgolf

    Elon Musk volunteers Tesla to make ventilators for coronavirus patients ‘if there is a shortage’

    https://www.usatoday.com/story/money/cars/2020/03/19/coronavirus-teslas-elon-musk-offers-make-ventilators/2873355001/

    “We will make ventilators if there is a shortage,” Musk said in response.

    • 0 avatar
      dal20402

      “If there is a shortage?” Patients in the Seattle area are doubled up on ventilators at this very moment. There is already a shortage, and if Musk meant this, he would already be tooling up.

      • 0 avatar
        chuckrs

        There are 160000 ventilators in the US. Are they all in use? If not, who is hoarding? Between FedEx and Amazon,we know they can be moved around. Also, if Musk says he can make them, he has a better track record of success than most. Let him prove it. After all, ten years ago, the only way a rocket stage landed was with a big kaboom. Now, for one company and one company only, intact recovery of rockets has become commonplace.

    • 0 avatar
      SCE to AUX

      I don’t understand how car mfrs will suddenly become FDA-approved medical device equipment mfrs overnight. What a farce.

      • 0 avatar
        SpinnyD

        If the Feds drop the FDA mandate then that will speed up the process, but there is still the problem of setting up machines and finding space in the factories. not as easy as most people think it is.

      • 0 avatar
        ToolGuy

        The FDA kind of sucks (general statement).

      • 0 avatar
        chuckrs

        Same way Singer Sewing Machine Co made 45 cal M1911s in WWII. Give them a set of plans that are known to work. No deviations allowed. If this is an existential emergency, use some suasion to work out a licensing agreement from patent holders, if any.

        • 0 avatar
          SCE to AUX

          That ‘set of plans’ could be a pile of documentation several feet thick. Mfrs need to prove to the FDA that their processes are repeatable and correctable.

          That, plus some tribal knowledge and unique skill sets and test equipment, make 3rd party reproduction of a medical device (or any product, really) very difficult.

          I’m not sure I’d be comfortable using the first ventilator built by a car mfr, S/N 00001.

          Another major issue is sourcing. Many items are sole-sourced, including circuit boards, molded components, cables, and soft goods. Adding capacity to assemble them doesn’t necessarily mean you’re going to get more output. Someone would have to open every bottleneck in the supply chain, and that will inevitably lead to legal issues, quality issues, or time constraints. This also assumes alternate suppliers are even staffed to do the work.

          Just getting a new molded plastic part is a 12-week lead time, then the mold must be tweaked to hit the spec. Just this exercise alone requires a team of engineers and technicians, buyers, and project managers at the tool maker, the molder, and the final assembler.

          So any efforts to build more medical equipment at alternate suppliers is probably many months away from fruition, if ever.

          • 0 avatar
            ajla

            Automakers are working with ventilator manufacturers in Europe as well so this isn’t just Musk talking out his a$$.
            There are apparently certain pneumatic parts and electronics that auto plants can lend a hand with creating without doing a total end-to-end build.

        • 0 avatar
          Art Vandelay

          “Same way Singer Sewing Machine Co made 45 cal M1911s”

          My M2 in Iraq was stamped “AC Spark Plug Division, 1941”

          Man if Ma Deuce could have talked.

  • avatar

    In a broad sense the bottom line is: do you only care about yourself (cue folks buying $65 of toilet paper that they quite possibly would not use even if quarantined for a month) or do you care about others (cue woman in KC who unknowingly bought TP and took her purchase back to the store after she discovered her family already had enough.)?

  • avatar
    Art Vandelay

    Are they the last automaker still producing in the US? I know Hyundai in Alabama just closed as had Toyota and I thought the UAW plants had already shut it down.

  • avatar
    Arthur Dailey

    A number of small independent distillers of fine liquor in the GTA have converted their facilities to produce hand sanitizer which they are distributing free of charge to seniors and community groups.

    Fortunately we are not all callous.

  • avatar
    FreedMike

    C/D is reporting Tesla is suspending production at this plant after all.

  • avatar

    No. It is free country.

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