Tesla will suspend production at its San Francisco Bay Area vehicle factory on March 24, ending a standoff with California authorities concerned about the spread of the coronavirus.

The company said its New York solar roof tile factory also will temporarily suspend production, while operations at its Nevada battery plant will continue.

“Despite taking all known health precautions, continued operations in certain locations has caused challenges for our employees, their families and our suppliers,” the company said in a statement. Tesla’s shares were down 8% in after-hours trading following the announcement.

The decision to suspend production at the Fremont, California, plant comes as Tesla ramps up production of its Model Y sport utility vehicle at the factory. Demand for the Model Y is expected to be higher than for all of Tesla’s other models combined, Chief Executive Elon Musk has said.

Musk on Thursday tweeted that Tesla’s China operations were running “normally across hundreds of suppliers & all of Tesla Shanghai.” The $2 billion Shanghai factory, which started delivering Model 3 sedans in December, is key to Tesla’s growth strategy and the company plans to expand production capacity there.

A Shanghai-based Tesla representative told Reuters the Chinese factory’s production rate has exceeded pre-coronavirus levels and over 91% of workers have returned to work since March 6.

Tesla plans to start building Model Y SUVs in Shanghai from 2021 and expand car parts manufacturing capacity, a government document seen by Reuters showed.

Cui Dongshu, secretary general at the China Passenger Car Association (CPCA) told Reuters Tesla sold around 3,900 vehicles in February, up from 2,620 vehicles in January.

Reuters