May 12, 2020 - Energy & Environment

Tesla emerges as focal point in reopening battles

Ben Geman, author of Generate

People waiting to see the unveiling of the Tesla Model Y at the Tesla Design Center in California on March 14, 2019. Photo: Frederic J. Brown/AFP via Getty Images

Tesla's California factory is now ground zero in the politically fraught debate about how to revive economic activity nationwide — and the decisions can have potentially life-or-death consequences for workers.

Driving the news: Tesla CEO Elon Musk yesterday announced reopening the electric automaker's Fremont manufacturing plant in defiance of county officials.

  • "I will be on the line with everyone else. If anyone is arrested, I ask that it only be me," Musk said via Twitter.
  • The company says it's employing "comprehensive safety measures."
  • But the Washington Post quotes several workers, who spoke anonymously to protect their jobs, saying safety practices were inadequate.

Why it matters: Tesla dominates U.S. EV sales and has a growing global footprint, despite its volatile economic performance for years before becoming slightly profitable in recent quarters.

  • And as Axios' Dan Primack notes, this is the highest-profile battle so far between a private company and public health officials.

What they're saying: Alameda County health officials yesterday said Tesla was in violation of their orders.

  • They said in a statement that they hoped Tesla would comply with local rules "without further enforcement measures," and that they look forward to an agreement on a "protocol and timeline" to safely reopen.
  • Tesla filed a lawsuit against the county over the weekend.

Threat level: Tesla CFO Zach Kirkhorn said during the company's first-quarter earnings call that the shutdown will "have an impact on our near-term financial performance."

  • But Kirkhorn expressed confidence they'll have "sufficient liquidity" to proceed with key investments based on various scenarios modeled into 2021.
  • Tesla's battle with county officials comes as Detroit auto giants like Ford and GM prepare to restart plants in coming days.

The big picture: Bloomberg's coverage sums it up well...

"To Musk supporters, he’s a hero fighting back against unnecessary government intervention. To his detractors, he’s a reckless and impulsive leader who’s encouraging dangerous behavior that could set back efforts to quell the pandemic."

The intrigue: Musk is no stranger to controversy, but he's in uncharted waters — legally and imagewise — with his open defiance of country orders in a state that's Tesla's largest market.

  • None of his past imbroglios, such as the ill-fated take-private plans, have been so tethered to public health decisions.

One big question: Is Musk — who has been attacking lockdowns for weeks — risking a consumer backlash at a time when competitors plan to bring a suite of new models to market?

  • The Sacramento Bee on Sunday posted a scathing editorial, calling Musk a "bullying troll with no regard for anything beyond his own business interests."

The Trump administration is not exactly pro-electric vehicles, but Tesla has Treasury Secretary Steven Mnuchin in its corner in the company's battle to restart its California factory.

What they're saying: "I agree with Elon Musk," Mnuchin told CNBC Monday.

  • "He’s one of the biggest employers and manufacturers in California, and California should prioritize doing whatever they need to do to solve those health issues so that he can open quickly and safely," he said.

The state of play: Various Texas politicians and officials have taken quick notice of Musk's weekend threat to pull his company HQ and some operations out of California and relocate to Texas or Nevada.

  • Gov. Greg Abbott (R) retweeted Musk's threat with an eyes-open emoji.
  • Rep Dan Crenshaw (R) said "Good conservative principles make good governance, and attract the best and the brightest" as he also circulated Musk's comment.

Go deeper: Elon Musk reopens Tesla factory in California, defying virus restrictions

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