A dispute has been rapidly growing between the State of California and Tesla (NASDAQ: TSLA) amid the latter's desire to resume operations despite California's pandemic-related restrictions. Tesla has defied restrictions by opening its California based plant.
The dispute originated from Alameda County's desire to keep the factory closed as it was considered a non-essential business. In response, Tesla filed a lawsuit against the county, claiming that the regulations were "unconstitutional" and that its Fremont plant was "essential infrastructure." The dispute has triggered a series of Twitter-based tirades by both Tesla CEO Elon Musk and state officials, though many state officials sought to cool the conflict rather than escalate it. However, San Diego Assemblywoman Lorena Gonzalez made headlines for her blunt response to Tesla's actions: "F*ck Elon Musk."
Musk took to Twitter to voice his dissatisfaction with the restrictions, going so far as threatening to take Tesla out of California entirely. "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 at all, it will be dependen (sic) on how Tesla is treated in the future. Tesla is the last carmaker left in CA.," said Musk. The Fremont plant is now open on Musk's orders, in direct defiance to county orders. Musk has gone so far as to challenge the county to arrest him.
State officials are working to negotiate with Tesla to safely keep the plant open while avoiding the company leaving the state. Governor Gavin Newsom has stated that it is up to California's county authorities to set their own regulations related to the pandemic and that it is entirely allowed for counties to set more stringent rules than those set by the state. Newsom did, however, state he had great reverence for the company, much to Musk's satisfaction.
While the stage is set for a showdown between state/county authorities and Tesla, it would appear that any conflict will be short-lived as officials seem to be taking whatever measures they can to appease Tesla, lest the company leave the state and put many Californians out of work. It has been stated, however, that the decision to make any arrests or potentially any forced closures of the plant would be at the behest of the Fremont police department, but that Fremont police would act on the discretion of county health officials. While it may not immediately appear likely that any rash actions such as arrests will take place, the fact that local authorities have made no decision means that a forced closure is not off the table, however likely or unlikely that may be.
In short, the showdown has seemingly opened up the possibility of Tesla moving entirely out of California if Musk follows through on his threats. The mere potential of the electric vehicle giant looking for a new home has drawn state governors to social media, many of whom are looking to woo Musk and bring the manufacturer to their state in what would surely be a lucrative deal for the state that successfully lures Tesla within its borders.