Tesla files suit in response to coronavirus restrictions after Musk threatens to relocate operations
Tesla on Saturday filed a lawsuit against the California county that has prohibited the electric car company from producing vehicles during the outbreak.
The company alleged in its suit, filed in the U.S. District Court for the Northern District of California, that Alameda County had violated the due process and equal protection clauses of the Fourteenth Amendment and sought an injunction that would allow the company to operate. Its Fremont manufacturing plant is located in that county.
The suit followed chief executive Elon Musk threatening in a series of tweets earlier Saturday that the company would sue and move Tesla’s headquarters and future programs to Texas and Nevada.
He appeared to leave open the possibility of maintaining some operations in Fremont depending “on how Tesla is treated in the future.”
The automaker had planned to allow a fraction of its factory workers to return to work by Friday, but was warned by the Alameda County Health Department in a livestreamed town hall on Friday that such a move would be violating the county’s rules.
“This has been a collaborative, good faith effort to develop and implement a safety plan that allows for reopening while protecting the health and well-being of the thousands of employees who travel to and from work at Tesla’s factory,” the Alameda Health Department responded on Saturday in a statement to CNN Business. “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.”
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.
Despite Musk’s threat, it would be costly and difficult to quickly shift production from Fremont to 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 Securities analyst Daniel Ives wrote in a note to investors.
On Saturday, Musk also encouraged Tesla shareholders to file a class action lawsuit against the county for any money lost given that Tesla competitors in other states could resume their operations earlier.
He said that Tesla should be allowed to reopen because it learned how to deal with Covid-19 through its factory in Shanghai, China, which is currently the company’s only operating plant.
Republican Sen. Ted Cruz of Texas tweeted Saturday, “Come to Texas! We would welcome Tesla HQ in Texas. We love jobs & Texans very much want to open up & get back to work (while still staying safe & following sound science). We make lots of cars & trucks in Texas, and we’d love more!!”