Essential Tesla Avoids Lockdown

Essential Tesla Avoids Lockdown

by Gill D on November 23, 2020

Elon Musk’s COVID diagnosis has become just another statistic in the rising number of new cases in California. With the pandemic’s next wave hitting the state, new restrictions are coming into play so institute a lockdown. However, the Tesla boss is making sure his production remains unaffected and Tesla factory workers will be considered as essential workers this time around.
Earlier this year, Elon musk’s Twitter feed expressed his dissatisfaction with lockdown restrictions with the first outbreak of the coronavirus and Tesla stock took a hit.

The Tesla CEO criticized the ongoing lockdown in the US demanding that people got their freedom back. Tesla's Fremont facility had to close in March and during Tesla's first-quarter earnings call at the end of April, Musk said the US government's stay-at-home order "forcibly imprisoned people in their homes against all their constitutional rights."

Tesla’s price per share fluctuated during this period and the lockdown caused a headache for the EV’s production schedule. Musk even threatened to move all operations out of California to Nevada or Texas.

Although health officials claimed they need to close all facilities for a two week period just to try get the spread under control, Musk kept resisting their measures. The CEO had to relent and closed Tesla's production, but faced criticism for defying orders. However, the Tesla car production facility wasn’t down for too long and Musk tweeted on 12 May that they were restarting operations, which was a move that disregarded the Alameda County regulations. But Musk didn’t rest there and filed a lawsuit against Alameda County alleging 14th Amendment violations.

Tesla news was rattling off reports that streams of vehicles were heading to the Tesla Fremont, which indicated the employees were following the CEO’s orders and getting back to work. Musk confirmed: "Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me."

Eventually, Tesla got their way to resume operations and since then, the state has added manufacturing to its list of essential workforces, which exempts the EV car manufacturer from all lockdowns. It was a good call by the state seeing as though Elon Musk’s worth has soared and Tesla’s stock price has increased in value with the announcement of its December listing to the S&P 500. It’s not a business the Californian state will want to lose.

To avoid further clashes with Elon Musk and Tesla, the EV carmaker has been granted the exemption on the condition that its factories follow the necessary health guidelines to ensure employees are equipped with the facilities to manage the safety of workers and prevent the spread of the virus.

"The limited stay-at-home order does not apply to employees deemed essential workers — manufacturing is listed as an essential workforce," said California's Department of Public Health. The stay-at-home order sets out a statewide curfew that will remain through to mid-December and this will affect over 90% of California’s residents, including Alameda, where the Tesla Fremont facility is located.

Despite Musk’s threats to move production out of state, analysts didn't think it would be feasible for the carmaker to make such a drastic move because it would cost an estimated $1 billion and would seriously interrupt production goals that would have a wide scale impact for the car manufacturer. It’s possible that Tesla will set up future programs in other states as Elon Musk’s Twitter comments revealed his thoughts on California: "I’ve spent more than half my life in California & love the state. But, frankly, I think CA has the winning-for-too-long problem."

While California's state health regulators have deemed Tesla essential, Alameda county could still bring more restrictive rules depending on whether COVID-19 cases drop, but for now, it will conform to state guidelines.

Corporate executives are supposed to refrain from issuing market-moving statements while trading is happening, which is especially true for Musk, who agreed to have his public messaging vetted by lawyers with the Securities and Exchange Commission in 2018 stemming from a fraud settlement. This doesn’t seem to curb the Tesla CEO’s eagerness for using his social media platform but with caution...

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