Tesla sues California county in virus factory closure fight, threatens to leave

(Reuters) – Tesla Inc (TSLA.O) sued local officials in California on Saturday when the electric carmaker pushed to reopen its plant there and Chief Executive Elon Musk threatened to move Tesla's headquarters and future state programs to Texas or Nevada.

Musk is pushing to reopen the Tesla plant in Fremont, California, after the Alameda County Health Department said the automaker should not reopen because local blocking measures to stem the spread of the coronavirus remain in place.

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In a blog post on Saturday, Tesla said the county's position left no choice but to take legal action to ensure that Tesla and his employees can get back to work.

The company said it had developed a complete return to work plan that includes online video training for personnel, work zone partition areas, temperature screening, requirements for using protective equipment and strict cleaning and disinfection protocols.

The company said it had informed health officials in Alameda County, where the Fremont plant is located, about its restart plans, but said the interim employee did not return calls or emails.

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The Alameda County Department of Public Health, which on Saturday said it was "communicating directly and working closely with the Tesla team", did not immediately respond to a request for comment.

Tesla filed a lawsuit against the county in the San Francisco federal court on Saturday, calling continued restrictions "county seizure" since the California governor said on Thursday that state manufacturers could reopen.

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The company said Alameda was going against the federal and California constitutions, as well as challenging the governor's order, the suit said.

ARCHIVE PHOTO: Tesla CEO Elon Musk speaks at an opening ceremony for the Model Y program, manufactured by Tesla China, in Shanghai, China, on January 7, 2020. REUTERS / Aly Song / File Photo

Alameda County is expected to remain closed until the end of May, with only essential businesses allowed to reopen. The county said it did not consider Tesla an essential business. County officials did not immediately respond to a request for comment on the case.

Frank Musk also took to Twitter on Saturday to complain and threatened to leave the state.

"Whether we continue Fremont's manufacturing activity will depend on how Tesla will be treated in the future," he tweeted, referring to facilities in the San Francisco Bay area, which is the only US vehicle plant at Tesla.

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Alameda County said on Saturday that it is working with Tesla to develop a safety plan that "allows it to reopen while protecting the health and well-being of the thousands of employees" who work at the plant and hopes to reach an agreement on a security plan very soon.

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Fremont Mayor Lily Mei expressed concern about the possible economic implications of continuing to apply for shelter there, with no provisions for manufacturers like Tesla. Mei on Saturday asked the county to work with companies on "acceptable guidelines for reopening."

Musk had told employees on Thursday that limited production would resume in Fremont on Friday afternoon.

Last year, Tesla built almost half a million vehicles at the Fremont plant and moving the entire production facility would be a huge undertaking.

Dan Ives, an analyst at Wedbush, estimated on Saturday that the company could take 12 to 18 months to reallocate production.

PHOTO: Tesla's only vehicle plant in the US is seen in Fremont, California, USA, during the global outbreak of coronavirus disease (COVID-19) on May 8, 2020. REUTERS / Nathan Frandino / File Photo

The threat to relocate the facility comes when Tesla plans to increase production at Fremont of its Model Y sports utility vehicle, which it hopes will generate record demand and profit margins.

Musk, who fought with California officials in March over whether Tesla should stop production in Fremont, criticized requests for blocking and staying at home, calling them "serious risk" to US business and "unconstitutional".

Tesla's shares have increased 127% since March 18, its lowest level at the recent close, including a 16.8% gain in the last trading week, reaching $ 819.42 on Friday.

Reporting by contractor Sabahatjahan and Maria Ponnezhath in Bengaluru, Tina Bellon and Sinéad Carew in New York; Editing by Daniel Wallis, Chris Reese and Dan Grebler

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