Elon Musk Defies Orders by Restarting Production at the Tesla California Facility

Elon Musk Defies Orders by Restarting Production at the Tesla California Facility
May 13, 2020

 

The CEO of Tesla Inc (Nasdaq: TSLA), Elon Musk, officially announced the restart of production at its Fremont, California plant, even though the local shutdown order to limit the spread of Covid-19 is still in force. The reopening of the assembly plant was confirmed by a tweet by Musk. The decision defies orders issued exclusively by Alameda Country. Interestingly, Musk has asked the authorities to arrest him only, in case they wish to take action. The stock of Tesla ended Tuesday’s trading session at $809.41, almost flat from the prior close.

California Governor Gavin Newsom relaxed shutdown rules last Thursday, permitting low-risk industries, including manufacturing facilities, to reopen. Musk quickly took note of the announcement and started planning to restart operations the next day. On May 8th, Tesla began to inform its employees about the restart of operations but faced resistance from officials of Alameda County.

Scott Haggerty, one of Alameda County’s district supervisors, was working out the reopening plan with Tesla executives. In particular, the supervisor and Tesla had provisionally accepted May 18th as a reopening date (also for GM, Ford, and Fiat Chrysler). However, Musk demanded permission to restart operations at the Fremont plant this week itself.

Haggerty said, “We were working on a lot of policies and procedures to help operate that plant, and quite frankly, I think Tesla did a pretty good job, and that’s why I had it to the point where on May 18, Tesla would have opened. I know Elon knew that. But he wanted it this week.”

As a follow-up, last Saturday, an injunction was filed against Alameda County by Tesla, requesting a grant of permission to reopen the assembly plant at Fremont. Additionally, the electric vehicle manufacturer made a blog post titled “Getting Back to Work,” which justified the legal action and decision to restart production, even though local rules necessitate the automobile manufacturer to remain in a shutdown condition. Musk also tweeted that he may shift Tesla to Texas/Nevada in the months ahead.

Notably, several news reports indicated that the plant has already been opened. In fact, videos of trucks moving out of the Fremont assembly plant were tweeted two hours before Musk’s announcement.

Musk has been quite outspoken about his objection to government prohibitions enforced during the coronavirus outbreak, specifically by Alameda County officials. In this regard, Musk had called the limitations dictated on Tesla as “absurd [and] medically irrational behavior in violation of constitutional civil liberties.”

Notably, so far, Musk seems to be ill-informed about the pandemic. Last month, he had earlier predicted that the US would have “close to zero” cases by the end of April. More strikingly, he had stated that the virus is no more dangerous than the flu and even promoted the unproven Malarial drug chloroquine as a prospective remedy.

While other automakers have adhered to Alameda County rules, Tesla is trying to dictate its terms of doing business. Even though the market is excited about the reopening of the factory, only time will tell if it was a wise idea.

The news of the reopening of the plant is anticipated to keep the stock range-bound with a slight bullish bias.

Technically, the stock has bounced off the 50-day moving average, which acts as strong support. The Chaikin money flow indicator also has a positive reading. Therefore, we are anticipating the stock to consolidate at these levels and then rise further.

tsl - technical analysis - 13th May 2020

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Janine

Janine

Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be


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