Tesla CEO Elon Musk threatened on Saturday to remove the factory and company headquarters from California and sued local officials who prevented the company from reopening its electric vehicle plant.
In a lawsuit in federal court, Tesla accused the Alameda County health department of exceeding federal and state restrictions against coronaviruses by preventing Tesla from restarting production at its Fremont plant. The lawsuit argues that workers at the Tesla plant are allowed to work during the California home stay order because the facility is considered “critical infrastructure”.
“Frankly, this is the final straw,” Musk tweeted. “Tesla will now move its headquarters and future programs to Texas / Nevada. “
He wrote that maintaining manufacturing at Fremont depends on how Tesla will be treated in the future.
Musk has been unleashed on orders to stay at home since the company’s first quarter earnings were released on April 29, calling the restrictions fascist and urging governments to stop taking people’s liberties.
An order in the San Francisco Bay area in six counties forced Tesla to shut down the plant from March 23 to help prevent the spread of the virus, and it was extended until the end of May. Public health experts say the orders have reduced the number of new coronavirus cases across the country. California Governor Gavin Newsom has allowed the Bay Area counties to maintain the restrictions while easing them in other areas of the state.
In a statement released on Saturday, the Alameda County health department said it was working with Tesla to develop a safety plan to allow the Fremont plant to reopen while protecting workers. “We are looking forward to reaching an agreement on an appropriate security plan very soon,” the statement said.
But the statement also said residents and businesses have made sacrifices to protect the health of locals. “It is our collective responsibility to go through the reopening and loosening phases of shelter restrictions in the safest possible way, guided by data and science,” the department said.
The mayor of Fremont, Lily Mei, said in a statement that she was increasingly worried about the regional economy without provisions for the main manufacturing to resume operations. “We know that many key companies have proven that they can operate successfully using strict security and social distancing practices,” the statement said.
Emails requesting comments from Newsom have not been returned.
Despite Musk’s threat, it would be costly and difficult to quickly move production from Fremont to Texas or Nevada. The Fremont plant, which was previously operated jointly by General Motors and Toyota, is currently the only Tesla vehicle assembly plant in the United States, and the company would lose critical production if it closed the plant to relocate equipment.
“Getting away from Fremont would take at least 12 to 18 months and could increase the risk to the manufacturing and logistics process in the meantime,” wrote Daniel Ives, analyst at Wedbush Securities, in a note to investors.
But Musk is planning another US plant to increase production, possibly in Texas, and may shift production once the plant is operational.
The lack of production at Fremont cuts Tesla’s revenues and constitutes a big financial pressure. In a conference call last month, Musk said the company only has assembly plants in Fremont and Shanghai, and that the Fremont plant produces the majority of its vehicles. He called the closure of Fremont “serious risk”.
Coronavirus causes mild or moderate symptoms for most people. But it has killed more than 78,000 people in the United States, and the death toll is increasing.
Ives wrote that there is now a high stakes poker game between Musk and county officials – and Musk has shown his cards. “Now all eyes are on the courts and the response from Alameda County and potentially California state officials. “
Musk’s tweets arrive as competing automakers begin reopening factories in the United States. Toyota will resume production on Monday, while General Motors, Ford and Fiat Chrysler all plan to gradually restart their factories on May 18. Tesla is the only major automaker with a factory in California.
Musk’s threats came after a series of bizarre tweets earlier this month, including one that said Tesla’s share price was too high. Musk also published parts of the American national anthem and wrote that he would sell his homes and other property.