On Saturday, Tesla sued local authorities in Alameda County, California after they declared the company could not reopen until the county’s ongoing stay-at-home order expires at the end of May. The electric automaker planned to restart its Fremont manufacturing plant as early as last Friday, but that rubbed against officials who said that the company could not do that — another conflict that came after Tesla originally tried to remain open as the area went into a stay-at-home order in late March.
Now, the company’s complaint filed in the U.S. District Court for the Northern District of California says the county is engaged in a “power-grab” by not allowing Tesla to reopen. The lawsuit states the health order goes against California governor Gavin Newsom’s order as to what is deemed an essential business that can remain open, while also contending the county is violating the Due Process Clause of the fourteenth amendment in not having a procedure to challenge the county’s determination that Tesla is not an “essential business”.
In its “Return to Work” playbook posted Saturday, the company laid out its plans for Fremont’s 10,000-plus employees to return to work. “Given the governor’s recent guidance, which is supported by science and credible health data, the state and federal government’s classification of vehicle manufacturing as national critical infrastructure, and our robust safety plan, Tesla has started the process of resuming operations.” The company went on in their blog to call out Alameda County’s insistence that their facility remain shut down when surrounding counties are, as touted throughout nearly all media outlets in recent weeks, “reopening their economies.”
Musk threatens to leave the state
On Saturday, Musk tweeted out several intense protests of the county’s decision. “Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity as well, it will be dependen (sic) on how Tesla is treated in the future.
Referring to the last part of Musk’s tweet, it’s not likely Tesla would physically move production out of California anytime soon. The company’s headquarters building is currently located in Palo Alto, which is in neighboring Santa Clara County. Tesla has received several hundred million dollars in tax credits from the state of California, both for constructing the Fremont plant and actually selling its vehicles within the state.
In Electrek’s comprehensive breakdown of Musk’s companies receiving some $4.9 billion in government support in 2015, $90 million of that went toward building out the Fremont plant for the Model S. InsideEVs also covered $128 million that Tesla received under California’s Sales and Use Tax Exclusion program (STE), a measure meant to support local manufacturing.
Given the incentives Tesla received to set up shop in Fremont in the first place, it’s unclear whether the company would be required to reimburse local or state governments for those incentives, should Musk make good on his threat to move both Tesla’s headquarters and manufacturing out of the state. There’s also the risk that a number of employees would lose their jobs should Tesla move, if the company takes the opportunity to eliminate positions or if those in California don’t want to move to Nevada or Texas, or wherever new manufacturing may end up.
Tesla stock still soared
Despite Musk’s growing fight with the state, the company’s stock still soared upon news that it would restart production. After falling a bit from a monthly high of $819 last Friday, the company’s stock is trading at $809 as of Monday morning.
While we wait to see how Musk and Tesla’s board pivot the company’s direction moving forward, it will undoubtedly continue with its aggressive product strategy, including pushing the Model Y as well as preparing for the Cybertruck, Semi and Roadster.