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Elon Musk Says Tesla Suing California County, Moving Headquarters Out Of State
"Week. California started phasing in the reopening of business including manufacturing so when that was announced Tesla CEO Elon. Musk sent out a memo to ten thousand employees at a factory in Alameda. County telling them to come into work the next day but just a few hours after that memo the local government in Alameda County said not so fast they were keeping tighter restrictions in place and Tesla's factory was not allowed to open yet in response. Tesla sued and Monday. Musk said they're opening their factory. Anyway here to tell us all about this lawsuit and what it could mean for businesses and governments across the US is our reporter. Tim Higgins Tim. Thank you so much for being here. Thank you all right. Let's start with Tesla. What is Tesla arguing in this suit? One of the things that you must angry about is that The California state government has to open up again including manufacturing and he's arguing that essentially that the local government has overstepped its authority by saying that. Tesla's factory cannot reopen that. The governor's office allowing for the state to reopen and that the US constitution allows for these sorts of things so really Arguments at the county. Government is overreaching and then he made a comparison to another facility. That is a nearby county. What's his argument? There Tesla has its has one assembly plant in the US but it has a number of facilities around California that help with the business. And there's a factory that is not that far from the assembly pant that has in a different county and the people there are not facing the same kind of shelter in place restrictions. Tassels reason the question of why are why isn't a uniform wise? They're pointing to figures. They say indicate that the rate of infection is very similar Why is one place stricter than the other so? Musk actually went a step further and reopened TUSLA yesterday. Right surprising a lot of people Monday. Tweeting out that He was opening the factory starting production that day in fact he said he's going to be on the assembly line and that if the police show up to arrest people he should be the one that's arrested so let's just back up a little bit. This sets tesla apart from many of its tag counterparts right. I mean facebook and others have announced that they're not bringing employees back to the office for months. Why is Elon? Musk and tesla wire. Wise Tusla's taking such a big stand here exactly facebook and Google and others. They can largely do their work at home on computers. Were Tesla makes cars. It needs an army of workers in the factory banging on metal to build these vehicles so they can sell them and without the Fremont Factory Online. It doesn't have anything to sell here in the US eventually. The cars that they made prior the shutdown. They're not gonNA have anything. So if Tesla is going to take advantage of any potential economic rebound that something might occur in the months to come as the country learns to live with the Corona virus. It needs cars. The shutdown came at a bad time for Tesla. It was just a ramping up. Production of its newest vehicle. The Model Y Compact Sport Utility vehicle is a vehicle that Elon. Musk has said could be. The company's top seller analysts expected to do very well. It's a good segment for this kind of vehicle and really there was a lot of enthusiasm among investors about the year ahead and so what the Krono virus has done is essentially. Put everything on ice and The problem for you on musk. Is that this. Factory has been sitting Essentially vacant for weeks. Now and he needs the lifeblood of the company to kick back on. I guess comparing to facebook isn't quite fair. I mean the better comparison might be to other. Automakers what are we seeing Michigan do for example and how our automakers they're responding. That's some of the frustration that musk has been. Venting is that Michigan announced last week and then that they were bringing manufacturing back online this week so Monday. As Yuan is sitting there unhappy that his factory is an open open. Places in Michigan could come back online and he knows his competitors have already announced. Gm for Chrysler others that they're kicking up production GM and Ford. They're a scheduled to start assembly vehicles again next Monday and here in California. That's that's not the case so elon. Musk has taken it another step further. He also has threatened to move production out of California altogether. He's saying maybe to Texas. What kind of impact could his departure have on? The state would smell something that can happen. Overnight it's not as simple as picking up his tools and going to Texas and starting to make cars and a new factory I. It's much more complicated. And it's something that probably would take years to do but the effect would be dramatic. Tessa wouldn't be the first car company to pull out of California Toyota. Its headquarters for the US. North America used to be based on your La and they pulled out over the course of several years starting in two thousand fourteen and they went to Texas because in emerged part it's cheaper to operate their California had just gotten to expensive the factory that Tesla owns and California used to be a factory that was jointly operated by General Motors and Toyota in when GM wind bankruptcy left to Toyota and Toyota. Didn't want to didn't want to be there anymore. I wanted to go to someplace. Cheaper the state of California has in recent generation or so struggled to keep a car manufacturing and the Fremont factory the fact that Tesla was able to buy in two thousand ten and resume making vehicles there in twenty twelve was seen by the the region him by Government officials is a huge win and is something very important for the economy states. Local leaders across the country prize car factories. These are things they want. It means jobs. It means economic investment. It means all the and things that go with with that so it's not just the car factory it's the suppliers and the ecosystem that creates and brings into the community so this kind of threat in some ways was almost going nuclear to say that he was going to pull out of of the state now a lot of people are saying or asking was was just because he lost his temper. And and that sort of thing. Well we'll see. He has said on twitter that he's not messing around and he's taking this very seriously. Some of this of course is also. He's in essentially negotiating in public. He's trying to push put pressure on on the local government to allow him to open up. Yeah I mean it's it's a very public lobbying effort if you can call it that I think the interesting thing is. We'VE SEE BUSINESSES. Do this all the time time right to get tax incentives or or other deals but in this case it's public health interests that are at stake. How HAVE OFFICIALS IN ALAMEDA? County responded to this very open threat And is the pressure that he's putting on them seeming to impact their decisions to reopen at all whether the mayor of Fremont put out a statement saying that she supports Tesla and the Mayor of Palo Alto or the company's headquarters is located. Put out a statement over the weekend about their support for the company. It's a tough position for some of these elected officials They want to see the company. Back Open. They want to see businesses back. Open him yet. Some are also weighing the health ramifications. Several people have died in the county from Kovic Nineteen and they have reported More than two thousand cases of Govan Nineteen and so the concern among county leaders is that they're not sure if there's going to be a spike as they start to re phase in business activity and they'd like to see it play out a little bit longer and be prepared and the idea of ten thousand people coming into a facility is concerning and so they have been working with the company to make sure that the safety protocols in place and the Tesla has Publicized some of these. Things are what they're working on. And that's where the standoff here is. It's not when we're unique to test so there are lots of places and companies around the country who are frustrated and want to get back to the way things were and we've seen state by state by state Different ways of handling this. But there's probably no higher profile company in the US The take this kind of stand to to sue the local authorities and to Defy a local shutdown order. Well we wouldn't expect anything else from Elon. Musk I guess. Our reporter Tim Higgins. Thank you so much for joining us. Thank you