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Tesla will close down Fremont and New York factories

Workers in Fremont cheered as they opened the email telling them Tesla would finally shut down operations at the factories.

Tesla CEO Elon Musk unveiling the Model Y

Elon Musk unveiled the Tesla Model Y, which workers are building now in his Fremont factory, on March 15, 2019.

Photo: Patrick T. Fallon/Bloomberg via Getty Images

Tesla will "temporarily suspend production" at its Fremont and Buffalo factories after March 23 following several tense days of back-and-forth with local officials, according to an email sent to workers and shared with Protocol on Thursday afternoon.

Workers were told to "continue to report to your current location through end of day Monday as current operations will continue over the next few days," according to the email from North American human resources lead Valerie Capers Workman. "Starting Tuesday, March 24, we will transition to minimum basic operations to support our vehicle and energy service operations and customers, and Supercharging infrastructure, as directed by authorities."


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Despite ongoing safety concerns from Fremont workers and their families shared with Protocol, Capers Workman said in the email that the company is "taking all recommended precautions and continues to operate as a national critical infrastructure as defined by the federal government." In an apparent nod to the local political dynamics, Capers Workman wrote that, "Continued operations in certain locations due to shelter in place restrictions have been challenging to our employees, our families and our suppliers."

This was welcome news to worried employees in the factory, who had reported not feeling like the company was taking much precaution to protect them.

"People were cheering in here when we opened [the email], because we've all been pretty on edge," said one manufacturing worker who'd gone in to work at Tesla on Thursday. "It's disappointing that it's not til Monday, but we're glad that something is happening."

The Fremont Police Department had said Thursday that the police chief and city officials would meet with Tesla management to discuss "cooperation for compliance" with shelter-in-place orders. But employees had been stressed for days.

"Employees are scared. No one wants to lose their job," said one worker on the Wednesday night shift at the factory, who asked to remain anonymous to protect his job. "The county needs to come in the factory to see for their self."

In an email Wednesday night, Tesla reassured workers that "those of you who arrive at our Fremont factory tomorrow will see that we are handing out masks to be worn throughout the day, taking temperatures prior to entry, adding more hygiene stations inside the facility, rearranging operations to promote social distancing," and increasing cleaning. Personnel had been reduced to "only essential employees," said the email, also from Capers Workman, according to a copy reviewed by Protocol.

But one assembly worker who reported to work early Thursday said there were no signs of slowing down. His temperature was not taken, he was given a thin white paper mask, and then he went to work a few feet away from co-workers. His department had actually churned out more parts than usual on Wednesday night, as the company speeds up work on the Model Y, said the worker, who asked to remain anonymous to protect his job, but who shared photos and internal emails with Protocol.

"It looks like any other day here," the worker said. "All we've been told is if we feel sick to let them know, so they can basically put us on a list of people to get tested."

Sturdier respirator masks were available in vending machines, the employee said, but only for shift leads or supervisors who could get them by swiping their Tesla badges. Ensuring the CDC-recommended 6 feet of separation between work stations, he said, was not logistically feasible.

"It's impossible to run the line without people being close to each other," said the worker, who is particularly concerned about older co-workers. "There are employees in the factory in the vulnerable age range, and even more employees who have family members who are vulnerable."

Tesla did not respond to detailed questions about workers' allegations. Alameda County Sheriff's Office spokesperson Ray Kelly, who had been taking the lead in county communications about the order and Tesla all week, referred Protocol to the city of Fremont, which did not respond to repeated detailed requests for comment.

On Wednesday night, Elon Musk, a COVID-19 skeptic who has called the panic "dumb," appeared to change his stance slightly. Musk replied to a torrent of online criticism about keeping the factory open during a health emergency by saying that he was open to making ventilators at the factory "if there is a shortage." General Motors and Ford, which have suspended their auto manufacturing amid the crisis, have reportedly already been in talks with the White House to use idled factories to make ventilators. Many U.S. hospitals have warned they lack crucial ventilators to treat patients with serious symptoms.

Soon after, Musk responded to skeptical tweets about the numbers of new global COVID-19 cases. "My guess is that the panic will cause more harm than the virus," he wrote, "If that hasn't happened already."

Multiple Tesla workers who spoke with Protocol questioned Tesla and the county's math on how much the workforce would be reduced when it said 2,500 workers.

One Model 3 assembly worker said that "2,500 a shift seems normal." There are four daily shifts, he said, which would still total about 10,000 workers.

The shelter-in-place order currently in effect in Alameda County says that, "the health officer requests that the sheriff and all chiefs of police in the county ensure compliance with and enforce this order." When Protocol asked the sheriff's department who is responsible for evaluating worker concerns, spokesperson Kelly said, "Have them report this to the city of Fremont."

Neither Tesla nor Fremont police nor several other local officials responded to Protocol's requests for clarity about the number of workers authorized in the factory now. On Thursday, Fremont police tweeted that "Police Chief Kimberly Petersen and members of our city management team will meet with Tesla factory management today to discuss cooperation for compliance with the county health officer's order."

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On the ground, the uncertainty about if and when government officials might intervene at the factory had forced workers into the difficult position of weighing missed paychecks or the health of their families against Tesla's insistence that it's safe to come to work.

"I do remind him that he puts our family at risk every day he goes to work," said the wife of one factory worker, who asked to remain anonymous to protect her husband's job. "Plus, I have a compromised immune system." She said her husband was given a substantial-looking mask by Tesla on Thursday morning.

The spouse of a Tesla supplier who brings materials to the factory also contacted Protocol on Wednesday concerned about her husband going to work. He was weighing dipping into vacation days to avoid the factory, since other sick leave was not available.

"My company has provided disinfectant wipes and hand sanitizer, and that's all they've done," the worker said. "My company is controlled by Tesla, so until Tesla tells my company to stop sending parts, there is nothing they can do."

Hourly Tesla factory workers in Fremont and Buffalo will be paid their normal rates through March 23, and then the company "will provide paid leave during suspended operations," according to the new email sent Thursday. The company had said in emails earlier this week reviewed by Protocol that workers could "borrow up to 80 hours" of paid time off if their balance is low.

A Tesla Model 3 assembly worker told Protocol that there had been discussion of more-serious precautions inside the factory for days, but that many changes were yet to materialize. He signed a waiver over the weekend allowing the company to take his temperature, he said, and the forms also said that more social distancing would happen.


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"Seven people working on the same car makes it impossible to follow those recommendations," said the worker, who asked for anonymity to protect his job, but who also shared internal emails with Protocol.

Rumors swirled that workers have been leaving with flulike symptoms, according to text exchanges between co-workers from Wednesday night. In the messages shared with Protocol, they wondered what it might take for the factory to join much of the rest of the country in shutting down.

"My bet is they're going to just keep going," one worker said to another. "Who's going to check it and stop them?"

According to the email sent to workers Thursday, Tesla decided to close the factory down because it was challenging to continue operations amid the shelter-in-place restrictions.

"Mostly glad they finally decided health is more important than a few dollars," said one Fremont worker on Thursday afternoon.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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