After Mounting Criticism, Tesla Will Shut Down California Factory

Tesla, the luxury electric carmaker, said on Thursday that it would shut down production at its San Francisco Bay Area factory, which has remained open for several days in apparent defiance of a local county order.

The carmaker had caused uproar by continuing production even after Alameda County officials issued a shelter-at-home order that applied to businesses and individuals. Tesla did not qualify as an “essential business,” which would have exempted it from the order.

“In the past few days, we have met with local, state and federal officials,” Tesla said in a statement on Thursday. “Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers.”

Production at the factory, in Fremont, Calif., will stop at the end of the day Monday to allow for an “orderly shutdown,” the company said. It will also temporarily suspend production at a factory in Buffalo. Work elsewhere, including at its Gigafactory in Nevada, will continue, it said. Tesla also said that it had continued operating out of its Fremont factory at the “federal government’s direction.”

Earlier on Thursday, the Fremont Police Department said on Twitter that its police chief and other city officials planned to meet with Tesla management “to discuss cooperation for compliance” with the order, which took effect on Tuesday.

It was not clear what officials thought of Tesla’s decision to continue operating through Monday. The department and mayor’s office did not immediately respond to a request for comment on Thursday. Tesla did not respond to requests on Wednesday and Thursday for comment.

Tesla’s chief executive, Elon Musk has repeatedly played down the threat of the coronavirus outbreak, which has brought the world economy to its knees. On Twitter, he has described panic over the virus as “dumb,” and on Monday night he emailed Tesla employees inviting them to stay home if they felt ill or uncomfortable, though he said he would still head to work.

“I will personally be at work, but that’s just me,” Mr. Musk wrote. “Totally ok if you want to stay home for any reason.”

On Thursday afternoon, Mr. Musk predicted on Twitter that new coronavirus infections would come to a virtual end in the United States by the end of April.

In an email on Wednesday, Valerie Workman, Tesla’s head of human resources for North America, said that employees who were reluctant to go to work were allowed to stay home, but would need to use paid time off if they wanted to be compensated while doing so.

Carlos Gabriel, who works at the factory, said he had been frustrated by what he described as the company’s slow and disappointing response to the outbreak.

“Tell us your plan,” he said, adding, “We have to defend our families.”

Mr. Gabriel, who said he had been out sick all week with flulike symptoms, also started a petition calling on the company to shutter any plant at the first sign of contamination from the coronavirus and put all employees affected by such closures on paid sick leave until the plants reopened.

Tesla recently began producing its next vehicle, the Model Y, at the Fremont factory. The company also plans to make the Model Y at its new Shanghai factory, which had been shut down earlier in the year as the virus ravaged China but reopened last month.

The company, and its investors, are banking on the Model Y, a sport utility vehicle, to help make Tesla consistently profitable. It sells many more electric cars than any other automaker, but Tesla has not reported an annual profit since it was founded in 2003. The company’s shares fell nearly 7 percent in extended trading on Thursday after it said it was suspending production in Fremont.

In its statement, Tesla said it had $6.3 billion in cash at the end of last year before it raised $2.3 billion by selling more stock, which it said would be sufficient to “successfully navigate an extended period of uncertainty.” The company also said it had access to about $3 billion in credit lines.

On Wednesday, Tesla management told officials in Alameda County that it was reducing the number of employees working at the factory to 2,500 from 10,000, according to Ray Kelly, a county spokesman.

Under the order, businesses deemed nonessential may continue “minimum basic operations,” provided that employees keep six feet from one another as much as possible. It is up to businesses how to determine what fits that definition, Mr. Kelly said at the time.

In an email to staff on Wednesday night, Tesla asked only essential employees to report for duty at its Bay Area offices and said those who did would get masks and have their temperature checked.

Even as Tesla and Mr. Musk appeared to play down the threat of the outbreak, other automakers like General Motors, Ford Motors and Fiat Chrysler announced on Wednesday that they would suspend production in North America through at least the end of the month after facing pressure from employee unions.

Separately, G.M. and Ford have told the White House that they would be willing to produce ventilators if the administration was interested in mobilizing private businesses to manufacture equipment needed to respond to the coronavirus.

Mr. Musk also said, on Twitter, that Tesla and his other company, SpaceX, could produce ventilators if hospitals had shortages. Mayor Bill de Blasio of New York responded soon after, saying that the city was interested in buying ventilators and “could use
your help.” Mr. Musk replied, saying Tesla would connect with the mayor’s office to discuss its needs.

Neal E. Boudette contributed reporting.