Elon Musk Sues Calif., Threatens to Leave Over Virus Restrictions

‘Frankly, this is the final straw…’

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AP Photo: Tesla and SpaceX Chief Executive Officer Elon Musk.

(Liberty Headlines) Tesla CEO Elon Musk threatened Saturday to pull the company’s factory and headquarters out of California in an escalating spat with local officials who have stopped the company from reopening its electric vehicle factory.

On Twitter, Musk also threatened to sue over Alameda County Health Department coronavirus restrictions that have stopped Tesla from restarting production its factory in Fremont south of San Francisco.

“Frankly, this is the final straw,” he tweeted. “Tesla will now move its HQ and future programs to Texas/Nevada immediately.”

He wrote that whether the company keeps any manufacturing in Fremont depends on how Tesla is treated in the future.

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Musk has been frustrated about the stay-home order since the company’s April 29 first-quarter earnings were released, calling the restrictions fascist and urging governments to stop taking people’s freedom.

An order in the six-county San Francisco Bay Area forced Tesla to close the Fremont plant starting March 23 to help prevent the virus’ spread, and it was extended until the end of May.

California Gov. Gavin Newsom allowed the Bay Area counties to continue restrictions while easing them in other areas of the state.

Emails seeking comments Saturday from Alameda County’s public health officer and Newsom have not been returned.

On Friday, the Alameda County Public Health Department said it told Tesla that it did not meet conditions for a business to reopen.

“The Bay Area started with a higher disease burden than the rest of the state, which may mean tighter restrictions than the rest of the state for some time,” the department said in a statement. “Restoring all daily activities too soon risks a rapid spike in cases and would jeopardize the relative stability we’ve seen in our health and hospital systems.”

Despite the threat, it would be costly and difficult for Musk to quickly shift production from Fremont to another building in Texas or Nevada.

The Fremont facility, which was formerly run jointly by General Motors and Toyota, currently is Tesla’s only U.S. vehicle assembly plant, and the company would lose critical production if it shut the plant down to move equipment.

“Moving away from Fremont would take at least 12 to 18 months and could add risk to the manufacturing and logistics process in the meantime,” Wedbush analyst Daniel Ives wrote in a note to investors.

But Musk plans another U.S. factory to increase output, possibly in Texas, and could move production once that plant is up and running.

For the moment, the continued closure of Fremont is costing the company revenue.

On a conference call last month, Musk said the company only has two auto plants, and the Fremont facility produces the majority of its vehicles.

“We are a bit worried about not being able to resume production in the Bay Area, and that should be identified as a serious risk,” he said.

The coronavirus causes mild or moderate symptoms for most people. But it has killed more than 77,000 people in the U.S., with the death toll rising.

Ives wrote that there’s now a high-stakes poker game between Musk and county officials — and Musk showed his cards.

“Now all eyes move to the courts and the response from Alameda County and potentially California state officials.”

Musk’s tweets come as competing automakers are starting to reopen factories in the U.S. Toyota will restart production on Monday, while General Motors, Ford and Fiat Chrysler all plan to restart their plants gradually on May 18.

Tesla is the only major automaker with a factory in California.

Musk’s threats came after a series of fascinating tweets earlier this month including one that said Tesla’s stock price was too high.

Musk also posted parts of the U.S. national anthem and wrote that he would sell his houses and other possessions.

Adapted from reporting by the Associated Press.