- Tesla has reopened its Gigafactory in Shanghai amid the massive coronavirus outbreak in China.
- Why is Elon Musk engaging in such a reckless and immoral strategy?
- The company needs to meet its optimistic guidance forecasts to keep the stock from crashing.
How far will Elon Musk go to keep his Tesla (NASDAQ: TSLA) stock soaring? He’s already gone further than you’d think.
By reopening
Tesla’s Chinese Gigafactory in the middle
of the massive coronavirus outbreak , Musk clearly values profits over the safety of his workforce in China.
Tesla’s behavior is in sharp contrast to other American firms like Apple (NASDAQ: AAPL), Starbucks (NASDAQ: SBUX), and American Airlines (NASDAQ: AAL). These companies have all scaled back operations in China due to the outbreak .
So why is Tesla embarking on this reckless strategy? The answer lies in the
The Coronavirus Outbreak is Intensifying
Coronavirus is showing no signs of slowing down. according to the most recent data , the deadly respiratory illness has grown to infect over 50, people, with 1000 Total deaths. A total of have fallen ill in Shanghai, where Tesla’s new factory is located , while one resident has died.
Of the almost 492 infections in Shanghai, only 90 have recovered. Nearby Zhejiang records 1, cases while Anhui and Jiangsu record and 823, respectively.
Shanghai is surrounded by cities with significant infection rates. The likelihood of more diagnoses is high in the coming days. One professor claims the virus is infecting , (people every day.) Tesla’s factory workers will be working in these terrifying conditions.
Tesla Foolishly Resumes Operations at the Gigafactory in Shanghai
Despite the high risks, Tesla has decided to resume operations at its new Gigafactory in Shanghai . The stock soared up to 7% in the pre-market but is currently flat in early-morning trading.
Unconfirmed photographs show Chinese Tesla workers returning to work at the Shanghai plant. They seem to be equipped with face masks. According to the Centers for Disease Control and Prevention, facemasks are not an effective way to control the coronavirus.
Tesla’s workers are also reportedly living in large communal dormitories
Elon Musk Will Do Anything for Deliveries
So why is Elon Musk proceeding with this reckless and immoral strategy? The answer is simple: He needs to justify the wildly overoptimistic guidance he just delivered.
Elon claimed that vehicle deliveries would (comfortably exceed) ,
This is what he said in an earlier earnings call :
We need to bring the Shanghai factory online. I think that’s the biggest variable for getting to , – plus a year. Our car is just very expensive going into China. We’ve got import duties, we’ve got transport costs, we’ve got higher costs of labor here.
Musk went on to elaborate:
We need the Shanghai factory to have the cars be affordable. It’s important to appreciate, the demand for Model 3 is insanely high. The inhibitor is affordability.
Putting the Stock Price Over Public Safety
Tesla’s lofty 718508 projections sent the company stock price soaring to all-time highs of over $ 1000 following the fourth-quarter earnings call. Shares quickly fell back down to earth
as the market accounted for challenges with the coronavirus.
Musk could’ve given investors responsible guidance that accounted for the coronavirus’s impact. Instead, he decided to give the market a wildly over-optimistic forecast. Chinese workers are now risking their lives to make it a reality.
(Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
This article was edited by Aaron Weaver .
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