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Tesla Shares Drop As Alameda County Says Fremont Factory 'Not An Essential Business'

Tesla Inc.'s (NASDAQ: TSLA) shares dipped in the after-hours session on Tuesday over the possibility that its Fremont factory could be forced to shut down temporarily due to the novel coronavirus (COVID-19) outbreak.

Benzinga · 03/18/2020 07:05

Tesla Inc.'s (NASDAQ: TSLA) shares dipped in the after-hours session on Tuesday over the possibility that its Fremont factory could be forced to shut down temporarily due to the novel coronavirus (COVID-19) outbreak.

What Happened

"Tesla is not an essential business as defined in the Alameda County Health Order," the Alameda County Sheriff's Office tweeted late Tuesday.

Being deemed a non-essential business means Tesla will be required to abide by the local authorities' order of "shelter in place." This means the automaker will have to shut down a majority of operations at the factory, including manufacturing and delivering new cars.

"If Tesla was a hospital, if Tesla was a laundromat, if Tesla was a mechanic shop, we wouldn't be having this conversation," a county spokesman told Mercury News. "But Tesla makes cars, and that's not essential for us to get through this health crisis."

Why It Matters

The Fremont factory is Tesla's only manufacturing plant in the United States, where it makes cars, including the recently launched Model Y crossover sports utility vehicle.

Chief Executive Officer Elon Musk told employees earlier that he would "personally be at work," but it's "totally OK" for employees to stay home for health reasons, as noted by Mercury News.

Musk has played down concerns related to COVID-19, which has killed nearly 8,000 people across the globe, saying that "the coronavirus panic is dumb."

"Danger of panic still far exceeds danger of [coronavirus, in my opinion,]" Musk tweeted Tuesday.

Price Action

Tesla's shares traded 5.26% lower at $407.56 in the after-hours session on Tuesday. The shares closed 3.34% lower at $430.20 in the regular session, even as the wider market recovered from record losses posted earlier this week.

Photo Credit: Courtesy of Tesla.