Tesla Sues Over Shutdown as Elon Musk Threatens California Exit

Elon Musk lashed out at the California county blocking Tesla Inc. from reopening its only U.S. car plant, threatening to immediately relocate operations to other states and cease manufacturing at the factory.

Hours after the chief executive officer tweeted that Tesla would sue Alameda County, which didn’t allow the facility to resume operations Friday, the electric-car maker filed a complaint with the U.S. District Court in San Francisco. Tesla claims the county’s health order violates due process and “puts businesses deemed critical to the nation’s well-being by the federal and state governments between a rock and a hard place.”

Musk, who has called coronavirus-related shutdown orders fascist, said Tesla will decide whether to keep producing cars in Fremont, California, based on how it’s treated going forward. The Bay area was the first region in the country to implement stay-home orders to contain the spread of Covid-19 and has been cautious about lifting them.

Alex Spiro, the Manhattan attorney who helped Musk prevail in a defamation case last year, is the lead attorney in the suit, which along with Musk’s tweets ratchet up the pressure on California Governor Gavin Newsom and local officials. Musk, 48, arguably has been the tech sector’s loudest voice advocating for the reopening of the economy, drawing criticism from some peers in the business community and cheers from conservative political circles.

“Part of it is just frustration from the view of Musk and Tesla, given they are basically grounded around Fremont, which is the heart and lungs of their business,” Dan Ives, a Wedbush Securities analyst, said by phone. Musk is playing “a game of poker to put more pressure on the county to open up.”

Tesla has roughly 20,000 employees in the Bay area, including its headquarters in Palo Alto. The company announced internally in late March that two staffers tested positive for the virus but didn’t specify which office they worked in.

Aerial Views Of Silicon Valley Housing And Tech Campuses

Tesla’s assembly plant in Fremont, California.Photographer: Sam Hall/Bloomberg

In a blog post Saturday, Tesla said it has started the process of resuming operations and described its restart plan as “the result of months of careful planning and preparation.”

“Tesla is not an outlier, nor are we going against the grain,” the company said.

Musk at first defied Alameda’s mid-March shutdown order and resisted pressure from the county and Fremont to idle the factory. While Tesla claimed it was an essential business, the county’s health officer disagreed and said the plant posed a public-health risk. Much of the Bay area has since extended shelter-in-place orders through the end of May.

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