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Tesla Forced to Shut California Plant; Bank of America Makes Valuation Call

Tesla drops after the sheriff of the California county where its assembly plant is located says it should be closed; Bank of America upgrades stock to neutral.

Shares of Tesla TSLA were downshifting again on Wednesday, partly carried by a fresh wave of selling on Wall Street, though augmented by the sheriff of the California county where its sole U.S. assembly plant is located saying Tesla's manufacturing plant should be closed amid a shelter-in-place order.

Tesla stock was down nearly 10% in morning trading after the Alameda County Sherriff said via its official Twitter account that the electric carmaker is “… not an essential business as defined in the Alameda County Health Order.”

Tesla’s head of North American human resources wrote in an email to staff earlier Tuesday that vehicle manufacturing and energy infrastructure are critical sectors and cited the U.S. Department of Homeland Security.

Valerie Capers Workman, Tesla's regional human resources head, told Bloomberg that the designation allows Tesla to keep running its factory in Fremont, despite San Francisco Bay Area orders for people to stay home to limit the spread of coronavirus Covid-19.

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“Tesla is directed to comply with the Alameda County health order, and can operate their business at minimum basic operations,” said Ray Kelly, a spokesman for the county. “This decision was made by public health and other high-ranking county officials.”

More than 8 million Californians are living under shelter-in-place orders - the nation’s most stringent public health measures yet - as state and local governments rush to address the coronavirus pandemic.

Tesla has more than 56,000 employees globally, including an estimated 10,000 who work at the factory in Fremont. Alameda County had 27 confirmed positive cases of Covid-19, the disease caused by the coronavirus, as of Tuesday.

Meantime, Bank of America on Wednesday raised its rating on Tesla stock to neutral from underperform with a $500 one-year price target based solely on valuation. 

Tesla stock was down 9.7% at $388.47.