Earthquake risk to Tesla Motors

Just about every populated area is subject to some weather related disaster.

Tornadoes, hurricanes, earthquakes.

And/or mega snow storms that can cause long business delays.

"The Big One" can happen tomorrow, 100 years from now,300 years from now or 1000 years from now.

No real point in worrying too much about it.

Every couple of decades with new earthquakes we(Japanese,Californians,Chileans etc) learn more about building in earth quake zones and building codes get toughened and updated.

In 1985 an 8.1 earthquake devastated Mexico City. It woke people up to the corruption that was going on with city building inspectors and a massive pubic outcry caused deep change.

It was one of Mexico's instigators for democratization. In 2014 there was a 6.4 earthquake in Mexico City that scared people but relatively speaking did little damage. If Mexico had not upgraded their buildings from 1985 there would have been a lot of damage.

Any new building in CA is going to be quite good in resisting earth quakes including any potential Gigafactory.

BTW There is a famous story about Mexico City's first skyscraper Torre Latinoamericana built in 1956.

Mexican Architect Augusto Alvarez built it without compromise to the best of his abilities. Many construction managers shook their heads at the expense Alvarez took because he took no short cuts.

Alvarez and his family happened to be in the building the day the earthquake came in 1985 because his architectural firm's office where in the building and they saw building after building fall but Torre Latinoamericana stood without any significant damage.

MartinAustin said:

Might seem crazy, but the quake in northern California brings home the amount of damage to businesses that can be wraught.

If an earthquake of the same magnitude (6.1?) hits the Fremont area, what would be the setback to Tesla? Would the building hold up? Would all the robots need to be recalibrated, everything re-aligned and reset? How much damage to those gigantic aluminum presses would there be?

And, what if the quake is "the big one" ? Obviously our first concern would be all the people affected, and I am sure the USA and other helpful nations would respond with incredible assistance to the area; but eventually the economic effect to individual companies would be examined, and their stock prices would likely be under some pressure.

My point is, the second manufacturing plant can't come soon enough, for the sake of redundancy. And perhaps it would be best to keep the Gigafactory in a place that is not prone to earthquakes. If both the Gigafactory and manufacturing plant were damaged it could hurt Tesla (the company and the stock) significantly.

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Does anyone know if these questions were addressed either during a quarterly conference call or the annual shareholder meeting? I had similar concerns several years ago. When Japan got hit with a Tsunami in 2011, the disaster proved incredibly damaging to companies like Nissan and Honda. Honda's supply chain was so badly damaged that it took months to get back up to full production, and dealer lots were close to empty for some models of vehicle that relied on Asian-manufactured components.

In another thread, I posted my findings on the Fremont factory. According to USGS, the factory buildings sit on dense soil (indicated by being on a "green" zone), while some of the surrounding parking lots sit on looser "yellow" zone soil. The ground here appears to be stable.

The original Fremont factory was built by GM in 1962. Part of the original facility was demolished and re-built in 1982, when Toyota and GM created the NUMMI alliance (source: http://en.wikipedia.org/wiki/Fremont_Assembly). The radio programme "This American Life" also tells the story in vivid detail. The people at Toyota, a Japanese company, were likely cognizant of earthquake risks, as Japan has experienced frequent quakes in the past. I would expect that the NUMMI buildings were designed to withstand these sorts of events.

Although I have no definitive evidence, I believe it's more likely than not that the factory can physically handle an earthquake. The broader problem I think could come from disruption of power, water, roads, and workforce. The factory can't build cars if there's no power to run the robots, no workers (if they have to deal with injuries or damage to homes), and no supply chain (trucks unable to deliver components).

But yes, I agree that the Gigafactory would ideally be located in a geologically stable area, and that multiple factories will be crucial in the long run. Intel, for example, strategically locates its fabrication centers in different places all around the world, so that a disruption in one fab won't sink an entire product line. I'd like to see Tesla build a factory in Asia and a factory in Europe when it becomes possible for the company to do so.

Make sure there is earthquake insurance, as well as volcano insurance

spentan said:

Make sure there is earthquake insurance, as well as volcano insurance

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Déjavu all over again. Every two years we can recycle the short threads

anticitizen13.7 said:

Although I have no definitive evidence, I believe it's more likely than not that the factory can physically handle an earthquake. The broader problem I think could come from disruption of power, water, roads, and workforce. The factory can't build cars if there's no power to run the robots, no workers (if they have to deal with injuries or damage to homes), and no supply chain (trucks unable to deliver components).

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If Fremont is unable to produce cars it is irrelevant if GF1 can deliver battery packs.

Once they build a factory in Europe,China or a 2nd factory in North America they will also build a second GF closer to the second factory.

EQs are my one worry as an investor as it is presently an "All your eggs in one basket" situation. Having production cut in half would sure be a buying opportunity for TSLA.

So maybe it's just as well CAL will probably not get to host the #1GF due to legislative hold-up over this crucial weekend.
Concentrating on Fremont as the paramount factory site was a conscious gamble, AIUI, what with the resources available at the time, but as soon as possible a geographical diversification will happen. This cannot be the first time such a thought strikes Tesla leadership; totally out of the question.