Tesla’s Fremont factory, which is responsible for the manufacturing of the Model S, Model X, Model 3, and Model Y, may be able to resume some of its operations earlier than expected. This comes amidst the California government’s initiative to move to a “Stage 2” COVID-19 response, which includes the gradual opening of some lower-risk workplaces.
California’s upcoming shift to its Stage 2 COVID-19 response was announced by Governor Gavin Newsom in a post on Twitter. According to the official, some sectors whose operations provide a lower risk of coronavirus transmission will be able to reopen on Friday. These include businesses focused on retail, manufacturing, and logistics.
Considering that Tesla’s Fremont factory is one of Alameda County’s largest manufacturing facilities, there is a good chance that the site will be allowed to resume some of its operations with the state’s upcoming shift to its Stage 2 COVID-19 response. This update may bode very well for the company’s capability to boost its numbers for the second quarter.
The update from the California government is a very welcome one, especially considering that Tesla is under pressure to reopen the Fremont factory. CEO Elon Musk has made his sentiments about the lockdown known in a series of incendiary comments in the Q1 2020 earnings call and on Twitter, and just last week, furloughed Tesla workers were reportedly informed to standby until the end of the month.
Tesla’s second quarter results are primarily tied to the Fremont factory and its capability to resume its operations. While Gigafactory Shanghai is in a full ramp of the Model 3, most of the company’s vehicle production still happens in the California plant.
Thus, the longer California prevents Tesla from reopening the Fremont factory, the more challenging it will be for the electric car maker. This is especially true considering that other automakers such as General Motors and Ford are expecting to resume their vehicle production activities in the weeks to come.
Alameda County’s shutdown orders for the Fremont factory came at an unfortunate time for Tesla. Just before the shutdown, Tesla started customer deliveries of the Model Y, a crossover that has the potential to outsell the Model S, Model 3, and Model X combined. If Tesla can resume production and deliveries of the Model Y this Friday, then the company may very well have a fighting chance this second quarter.
