After weeks of feuding between Tesla CEO Elon Musk and local and state governments in California, the electric automaker will restart “full production” at its Fremont, California factory.
The California Bay Area was one of the first places in the U.S. to enforce a strict shutdown in response to the coronavirus pandemic. The rules meant that Tesla’s facility was forced to cease production.
At first, Musk was cooperative, even offering to use his Tesla factory for the production of face masks and other protective equipment. But when his proposed reopen date was denied due to an elongated Alameda County lockdown, Musk took to Twitter to decry the orders, calling them fascist and saying he was willing to be arrested if that’s what it took to reopen his car plant.
But this week, the San Francisco Chronicle obtained a letter that implies Tesla was given the legal go-ahead to move forward. Laurie Shelby, the company’s Vice President of Environmental, Health, and Safety, wrote in the announcement, “We have local support to get back to full production at the factory starting this upcoming week.”
Threat or Promise?
Part of Musk’s pressure campaign on California authorities was a threat to move his entire factory across state lines to Nevada or Texas. The Fremont facility employs 11,000 people, meaning such a move would have an intense effect on the local community and its economy.
But California Governor Gavin Newsom claims he never took the threat seriously.
“I’m also not worried about Elon leaving anytime soon,” the Democrat said on CNBC’s Fast Money. “I’ve had a lot of conversations with him, and we’re committed to the success and the innovation and the low-carbon, green growth economy that he’s been promoting for decades and [that] the state of California is accelerating in.”
A Gem of the Golden State
California has been a rock for Tesla since the company’s genesis. Not only does the Golden State house Tesla’s corporate and production headquarters, Californians are the company’s leading customer base.
Tesla vehicles have become high-fashion in a state where luxury technology and conspicuous progressivism are central to the culture. In fact, of the 158,925 sales that Tesla closed last year, more than 59,000 were made in California.
And while the electric automaker could save in taxes by migrating to Nevada, the cost of moving the entire production operation would be massive. Even in such a case, the likelihood of Tesla ending business in California altogether is slim.
Still, Tesla’s hall pass to restart manufacturing before the Bay Area lockdown has been lifted on other companies is sure to draw fire from those businesses itching to reopen. Size seems to matter. Alameda County has already announced its lockdown orders would last until the end of May, testing the patience of many in the local economy.