Electric carmaker Tesla is being forded to suspend production at its Californian production plant from next week. The announcement was made yesterday and the step is necessary if the company is to comply with local directives aimed at slowing the spread of Covid-19 in the Sunshine State.
Tesla’s solar roof tile factory in New York will also suspend production for the same reason. For now, the company’s battery plant in Nevada will continue to operate as normal. A statement released by the tech giant read:
“Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers.”
The delay comes at an inconvenient time for Tesla, whose share price has soared this year on strong orders for its new models and having finally managed to ramp up production to levels able to cut waiting lists for its vehicles. Production levels of Tesla’s Model Y sport utility vehicle were due to be accelerated. Its first model priced for the mass market, demand for the Model Y was expected to outstrip that for all of Tesla’s other models combined and finally lead the company into sustained profitability.
The announcement after markets closed yesterday saw Tesla’s share price fall by 7.1% in afterhours trading. Before that, the share price had soared over 28% during Thursday trading, buoyed by the Federal Reserve’s stimulus plans.
Elsewhere in Silicon Valley, Uber’s share price leapt by a massive 38.3% yesterday. The company, whose core business is its ride-hailing app, has been badly hit by the drop in travel over the past couple of weeks. Chief executive Dara Khosrowshahi yesterday reassured investors Uber could survive the coronavirus shutdown, despite bookings in some major cities falling by up to 70% year-on-year.
Mr Khosrowshahi told analysts that even if Uber’s ride-hailing business fell 80 per cent for the rest of the year, it would still have $4 billion of unrestricted cash and a $2 billion revolving line of credit to see it through. Other smaller competitors may be in a less fortunate position in terms of their cash buffers.
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