Coronavirus pandemic: Musk sues California over factory closure

Tesla Inc has sued local authorities in the US state of California as the electric car maker pushed to reopen its factory there and Chief Executive Elon Musk threatened to move the company’s headquarters and future programmes to Texas or Nevada.

In a lawsuit filed in federal court on Saturday, Tesla accused the Alameda County Health Department of overstepping federal and state coronavirus restrictions when it stopped Tesla from restarting production at its factory in Fremont.

The lawsuit contends Tesla factory workers are allowed to work during California’s stay-at-home order because the facility is considered “critical infrastructure”.

“Frankly, this is the final straw,” Musk 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.

Musk has been ranting 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.

The shutdown in Alameda County, where the Fremont factory is located, is scheduled to remain until the end of May, with only essential businesses allowed to reopen.

In a statement on Saturday, Alameda County’s Health Department said it has been working with Tesla to develop a safety plan that “allows for reopening while protecting the health and well-being of the thousands of employees” who work at the factory and that it looks forward to coming to an agreement on a safety plan very soon.

But the statement also said residents and businesses have made sacrifices to protect the health of people in the region. “It is our collective responsibility to move through the phases of reopening and loosening the restrictions of the shelter-in-place order in the safest way possible, guided by data and science,” the department said.

Fremont Mayor Lily Mei expressed concern about the potential economic implications of continuing the shelter-in-place order without provisions for manufacturers such as Tesla to resume. Mei on Saturday urged the county to work with businesses on “acceptable guidelines for reopening”.

Musk had told employees on Thursday that limited production would restart at Fremont on Friday afternoon.

Tesla builds more than 415,000 cars a year at the Fremont plant and moving the entire production facility would be a massive undertaking.

Dan Ives, a Wedbush analyst, estimated it could take the company 12 to 18 months to relocate production.

In a note to investors, Ives wrote that there was now a high-stakes poker game between Musk and county officials – and Musk had shown his cards. “Now all eyes move to the courts and the response from Alameda County and potentially California state officials.”

The threat to relocate the facility comes as Tesla aims to ramp up production at Fremont of its Model Y sport utility vehicle, the carmaker’s most profitable vehicle to date.

Musk, who sparred with California officials in March over whether Tesla had to halt production at Fremont, had criticised the lockdown and stay-at-home orders, calling them a “serious risk” to US business and “unconstitutional”.

Musk’s tweets come as competing automakers are starting to reopen factories in the US. 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 bizarre tweets earlier this month, including one that said Tesla’s stock price was too high. Musk also posted parts of the US national anthem and wrote that he would sell his houses and other possessions.

The coronavirus, which causes mild or moderate symptoms for most people, has killed more than 78,000 people in the United States, and the death toll is still rising.