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Coronavirus Wrecked Tesla’s Momentum and Elon Musk Is Furious Mr. Musk opened his California factory this

Question: Coronavirus Wrecked Tesla’s Momentum and Elon Musk Is Furious Mr. Musk opened his California factory this week in defiance of local orders. He has also criticized the response to the pandemic as “dumb” and “fascist.” By Niraj Chokshi Published May 13, 2020Updated May 19, 2020 A few months ago, everything seemed to be going Elon Musk’s way, as heCoronavirus Wrecked Tesla’s Momentum and Elon Musk Is Furious
Mr. Musk opened his California factory this week in defiance of local orders. He has also
criticized the response to the pandemic as “dumb” and “fascist.”
By Niraj Chokshi
Published May 13, 2020Updated May 19, 2020
A few months ago, everything seemed to be going Elon Musk’s way, as he presided
over an upstart electric car company that was worth more than General Motors, Ford
Motor and Fiat Chrysler combined.
That company, Tesla, had reported profits two quarters in a row, proving that it could
earn money even as it grew. Its stock was surging. Mr. Musk opened a factory in China
and was planning another in Germany. And his other business, SpaceX, was poised to
become the first to ferry NASA astronauts to orbit from American soil since 2011, a trip
scheduled for the end of this month.
Mr. Musk also claimed vindication by defeating a defamation lawsuit filed by a British
diver he had called a “pedo guy.” He was staying out of trouble on Twitter, where he has
long antagonized critics and regulators, who fined him $20 million in 2018 for statements
he made there. His girlfriend was pregnant, too, with a son born this month.
But the coronavirus set Mr. Musk off. Society’s response to the pandemic was “dumb”
and a “panic,” he said, arguing that the threat is overstated. And government stay-at
home orders were, in his view, unnecessarily stalling his plans to revolutionize the auto
industry and help solve climate change. He attacked local officials in the San Francisco
Bay Area for not letting him reopen Tesla’s factory, which he did this week anyway, in
defiance of their instructions.
Mr. Musk, the billionaire entrepreneur who co-founded PayPal, has always been volatile.
His latest attacks and statements have raised questions about Tesla’s financial health
and his own judgment, but they also reflect a recognition of the influence he wields as
one of the technology industry’s best-known iconoclasts.
“This is somebody who knows that what he says gets heard across the globe, and tries
to make a point about why he doesn’t take system-level constraints as a given,” said Rahul Kapoor, a professor of management at the University of Pennsylvania’s Wharton School. Mr. Musk’s anger was stoked in March 2020 when local officials ordered Tesla to close its factory, in Fremont, Calif., just as the company was poised to accelerate production of a highly anticipated new sport utility vehicle, the Model Y. Less than a year earlier, the company had been desperate for cash, and Wall Street had grown increasingly sceptical that Tesla could become anything more than a maker of luxury cars that only a sliver of humanity could afford. But Tesla’s fortunes had started to turn before the pandemic. In October 2019, the company announced a quarterly profit, a sign that it had solved production problems. Tesla’s stock began a long, astonishing rally. Shares peaked at $917 in February, up from $350 only three months before. Despite suffering along with the broader market in March and April, the stock closed at $790.96 a share on Wednesday, valuing the company at about $146 billion. By contrast, investors value G.M., which produces many more cars than Tesla, at less than $31 billion. By March 2020, Tesla was on a tear. Despite being slowed by the outbreak in China, the new Shanghai factory had reopened. In Europe, Tesla’s Model 3 sedan was outselling cars made by automakers like Volkswagen. The carmaker had just begun deliveries of the Model Y, which starts at about $53,000, in the ballpark of comparable S.U.V.s from BMW and Mercedes-Benz. But Mr. Musk’s dreams of dominating the car industry were put on hold when Alameda County forced the Fremont plant, which brings in most of the company’s revenue, to shut down in late March. That frustrated Mr. Musk, who had long dismissed the seriousness of the coronavirus. He has promoted unproven research suggesting that deaths from the virus are overstated and, around the time the factory was closed, predicted that there would be zero new cases in the United States by the end of April. (There were almost 32,000 new cases on April 30.) Mr. Musk resisted closing the plant, and in a late-April 2020 call with analysts called stay-at-home orders “fascist.” “They’re breaking people’s freedoms in ways that are wrong and are not why people came here or built this country,” said Mr. Musk, who is a native of South Africa. That week, he posted several odd messages on Twitter. Tesla’s stock was “too high,” he said, and added that he would sell “almost all physical possessions,” including his homes. Last week, Mr. Musk’s anger about the factory boiled over, and he threatened to move the factory out of California and sued the county in federal court. On Monday, Mr. Musk officially reopened the Fremont plant, to the frustration of some workers and county officials who had been negotiating a reopening plan with Tesla for weeks. “I will be on the line with everyone else,” he wrote on Twitter on Monday. “If anyone is arrested, I ask that it only be me.” Later that day, the county asked Tesla to cease operations until it reached an agreement with local officials. On Tuesday, the county said it had reviewed the plan and “held productive discussions” with Tesla. The county said that it had made safety recommendations and that if Tesla included them and public health conditions didn’t worsen, the company could reopen next week. County officials did not suggest that they would hold Tesla to account for ignoring the order, but noted that the Fremont police would verify that Tesla was adhering to safety measures as workers “prepare for full production.” On Tuesday, trucks were leaving the factory carrying cars and S.U.V.s as masked workers milled about. New cars were also parked in rows outside. The parking lot for employees was full. Tesla and Mr. Musk did not respond to requests for comment
President Trump, who has been pushing states to allow businesses to restart, voiced support for Mr. Musk, writing on Twitter on Tuesday that California should let Tesla reopen the plant “NOW.” But the president’s statement is unlikely to sway California’s governor, Gavin Newsom, a Democrat, who has deferred to counties on such issues. The state has authorized manufacturing, but Mr. Newsom said Monday that “if a county doesn’t want to go as far,” local orders would prevail. Mr. Musk’s decision to reopen the factory has put employees in a difficult position. In an email sent on Monday, the company told employees that they may remain home but would not be paid if they had already used up their time off and might also lose unemployment benefits, as determined by local government agencies. On Wednesday, the company said employees who chose not to go in would not be penalized. Several Tesla employees, who asked to speak anonymously for fear of retribution, said the company was putting a priority on profits over people. One man who worked at the factory on Tuesday said the company had checked employees’ temperatures at the start of his shift, distributed masks and rearranged a break room. But, he said, little had changed on the production line, where it is hard to avoid coming within six feet of others. As the factory reopened, Mr. Musk thanked employees for making “the factory come back to life.” “I have vastly more respect for someone who takes pride in doing a good job,” he said in an email, “whatever the profession, than some rich or famous person who does nothing useful.” Tesla gave workers permission to stay home rather than risk getting covid-19. Then it sent termination notices. When he defiantly reopened the company’s plant in Fremont, Calif., against county orders in May 2020, Elon Musk promised Tesla employees they could stay home if they felt uneasy. They would not be penalized, he said. If “you feel uncomfortable coming back to work at this time, please do not feel obligated to do so,” he wrote in an email sent to the company’s factory workers in early May that was viewed by The Washington Post. Nonetheless, two Tesla workers say they received termination notices alleging a “failure to return to work” after they opted to take unpaid leave to protect themselves and their family members when the factory restarted production the second week of May.
Elon Musk calls Tesla workers back to the factory (again). Health officials say no (again). In late April 2020, Musk went on an erratic tweetstorm that culminated in his writing “FREE AMERICA NOW” in response to widespread stay-at-home orders. He launched into an expletive-laden rant on the company’s earnings call the next day, labelling quarantine measures “fascist” and demanding that politicians return people’s “freedom.” Musk defiantly reopened the factory in early May, winning President Trump’s support as he bucked the county’s orders once more. Ultimately, county officials backed down and agreed to allow Tesla to fully reopen May 18th, 2020. The Post reported earlier in June 2020 that workers at the factory’s seat assembly plant were told multiple colleagues had tested positive for the coronavirus — and Alameda County officials confirmed Tesla had reported coronavirus cases in Fremont. Laurie Shelby, Tesla’s vice president for environment, health and safety, told workers in an email that there had been no workplace transmissions of the virus, though it was unknown how the exact origin of each of the cases would have been determined. Jane McAlevey, a union organizer who serves as senior policy fellow at the University of California at Berkeley’s Centre for Labour Research and Education, said Musk’s treatment of his workforce has been typical of tech companies in Silicon Valley. “He is causing untold problems for his workers,” she said. “He has stressed them out — there’s a huge history there before the covid crisis of health and safety violations. They’re saddled by the kind of promises and rushed production that get people hurt, and now he’s doing it again during a pandemic.” Since learning of the cases, some workers say they’ve been beset by fear of coming down with covid-19. It’s a matter of particular concern on the vehicle production lines, where multiple workers touch components and share machinery. Some pool into an outdoor tent where they assembles cars. Data found cases at Fremont, Calif., factory spiked in December Hundreds of COVID-19 cases were reported at Tesla Inc.’s production plant in Fremont, Calif., after it reopened in May 2020 in defiance of local health regulations, according to a new report. Citing county data obtained by the website Plainsite, the Washington Post first reported that there were around 450 coronavirus cases at the plant between May and December, 2020 when cases spiked to 125 cases. About 10,000 people work at the factory. Workers have complained about unsafe conditions at the Fremont factory for years, and Forbes reported in 2019 that Tesla had accumulated significantly more workplace safety investigations and fines by the Occupational Safety and Health Administration than its competitors.

Discuss the details of the Tesla’s scandal.
Tesla defended itself against the allegations in a Feb. 9 blog post, saying that the DFEH lawsuit “strains credulity,” though it’s not the first racial controversy the company has endured in recent months: last fall a court ordered the company to pay…View the full answer

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