Lily Mei, the mayor of Fremont, said Saturday she’s increasingly concerned about the economic impact of Tesla and other manufacturers not being allowed to resume operations. She encouraged the county to engage with local companies to come up with guidelines to reopen.
“The Alameda County Health Care Services Agency and the Public Health Department have been communicating directly and working closely with the Tesla team on the ground in Fremont,” the county said in a statement Saturday. “The team at Tesla has been responsive to our guidance and recommendations, and we look forward to coming to an agreement on an appropriate safety plan very soon.”
The mayor of Palo Alto, where Tesla has its global headquarters, also chimed in to voice his support for the company.
Following through on the threat to move Tesla’s headquarters and future programs to Texas and Nevada, where the company has its massive battery plant, will be costly and challenging for Musk but relatively easier than ending production in Fremont.
The factory is the only place in the world where Tesla makes the Model S, X and Y. The company purchased it from Toyota Motor Corp. in the wake of the global financial crisis for just $42 million and has sunk billions of dollars into the facility since then.
“The factory in Fremont was an all-stars-aligned opportunity for Tesla,” Ben Kallo, an analyst at Robert W. Baird & Co., said by phone. “I don’t know if you can quickly say ‘I’m leaving.’”
Musk has been scouting locations for a new U.S. factory to build the Cybertruck model that Tesla plans to start producing late next year. He’s hinted it could be constructed in Texas, where part of Tesla’s chip team is based. The Musk-led rocket company Space Exploration Technologies Corp. also has operations in the state.
Musk encouraged his almost 34 million Twitter followers to voice their displeasure with the county and endorsed the idea that shareholders could file a class-action lawsuit. He said Tesla knows more than the county does about what needs to be done to safely operate its factory after having reopened its plant near Shanghai earlier this year.
When Musk tweeted in March that Tesla was looking for places to build the Cybertruck, one analyst estimated the company could improve operating margins by 8% just by building cars in lower-cost areas than California.
But an ugly breakup with the state could be perilous. Musk risks turning off consumers who have registered more than 70,000 new Tesla vehicles each of the last two last years, according to IHS Markit. The company delivered almost 370,000 cars worldwide in 2019.