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ELON Musk lashed out at California County preventing Tesla Inc. from reopening its only US auto plant. USA, Threatening to immediately move operations to other states and stop manufacturing at the factory.
Hours after the chief executive tweeted that Tesla would sue Alameda County, which did not allow the facility to resume operations on Friday, the electric car maker filed a complaint with the United States District Court in San Francisco. Tesla says the county health order violates due process and “places companies deemed critical to the nation’s well-being by the federal and state governments between a rock and a difficult place.”
Musk, who called the coronavirus-related shutdown orders fascist, said Tesla will decide whether to continue producing cars in Fremont, California, depending on how it is handled in the future. The Bay area was the first region in the country to implement stay-at-home orders to contain the spread of Covid-19 and has been cautious in lifting them.
Alex Spiro, the Manhattan attorney who helped Musk prevail in a defamation case last year, is the lead attorney in the lawsuit, which along with Musk’s tweets increase pressure on California Governor Gavin Newsom and officials. local. Musk, 48, can be said to have been the strongest voice in the tech sector advocating for the reopening of the economy, drawing criticism from some colleagues in the business community and applause from conservative political circles.
“Part of this is just the frustration of Musk and Tesla’s vision, given that they basically rely on Fremont, which is the heart and lungs of their business,” Dan Ives, an analyst at Wedbush Securities, said by phone. Musk is playing “a game of poker to put more pressure on the county to open up.”
Tesla has approximately 20,000 employees in the Bay area, including its headquarters in Palo Alto. The company internally announced in late March that two employees tested positive for the virus, but did not specify which office they worked for.
In a blog post on Saturday, Tesla said it had begun the process of resuming operations and described its restart plan as “the result of months of careful planning and preparation.”
“Tesla is not an outlier, nor are we going against the grain,” the company said.
Musk initially challenged Alameda’s closure order in mid-March and resisted pressure from the county and Fremont to stop the factory. While Tesla claimed it was an essential business, the county health official disagreed, saying the plant posed a public health risk. Much of the Bay Area has since extended shelter requests at the site through the end of May.
The Tesla factory employs approximately 10,000 people, including many who travel from outside Alameda County.
Lily Mei, the mayor of Fremont, said Saturday that she is increasingly concerned about the economic impact that Tesla and other manufacturers are unable to resume operations. He encouraged the county to engage with local businesses to develop guidelines for reopening.
“The Alameda County Health Care Services Agency and the Department of Public Health have communicated directly and have worked closely with the Tesla team on the ground in Fremont,” the county said in a statement Saturday. “The Tesla team has responded to our guidance and recommendations, and we hope to agree on an appropriate security plan very soon.”
The mayor of Palo Alto, where Tesla has its world headquarters, also stepped in to express his support for the company.
Going ahead with the threat of moving Tesla headquarters and future programs to Texas and Nevada, where the company has its massive battery plant, will be expensive and challenging for Musk, but relatively easier than ending production in Fremont.
The factory is the only place in the world where Tesla makes the S, X and Y models. The company bought it from Toyota Motor Corp. in the aftermath of the global financial crisis for just $ 42 million and has invested billions of dollars in the installations. since then.
“The factory in Fremont was a star-studded opportunity for Tesla,” Ben Kallo, an analyst at Robert W. Baird & Co., said by phone, “I don’t know if you can quickly say ‘I’m leaving.'”
Musk has been searching for locations for a new US factory. USA To build the Cybertruck model that Tesla plans to start producing by the end of next year. He has hinted that it could be built in Texas, where part of Tesla’s chip team is based. Musk-run rocket company Space Exploration Technologies Corp. also has operations in the state.
Musk encouraged his nearly 34 million Twitter followers to express their discontent with the county and endorsed the idea that shareholders could file a class action lawsuit. He said Tesla knows more than the county about what to do to safely operate its factory after reopening its plant near Shanghai earlier this year.
When Musk tweeted in March that Tesla was looking for places to build the Cybertruck, an analyst estimated that the company could improve operating margins by 8% just by building cars in lower-cost areas than California.
But an ugly break with the state could be dangerous. Musk runs the risk of rejecting consumers who have registered more than 70,000 new Tesla vehicles in the past two years, according to IHS Markit. The company delivered nearly 370,000 cars worldwide in 2019.
The state has supported electric vehicle purchases by offering rebates of up to $ 7,000, with Tesla’s 3 and Y models eligible for $ 2,000.
“I think he disagrees with federal, state and local governments for most of this,” Kallo said of Musk. “Picking up and leaving is not really an option at the moment.” – Bloomberg
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