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Gavin Newsom, California Governor, is ‘not worried’ about CEO Elon Musk shifting Tesla out of the state as CEO faces legal battles over tweets. TSLA stock is up around 1% today.
On May 19, Gavin Newsom, the California Governor, told reporters that he is ‘not worried’ about Tesla CEO Elon Musk shifting the company’s activities out of the state. While speaking in an interview aired on “Fast Money,” he said:
“I’m also not worried about Elon leaving anytime soon. I’ve had a lot of conversations with him, and we’re committed to the success and the innovation of the low-carbon, green growth economy that he’s been promoting for decades, and the state of California is accelerating.”
Earlier this month, Musk tweeted that he was ready to shift Tesla’s headquarters and future operations from California. Musk said he would move due to a dispute with Alameda County’s public health officials. Tesla Inc (NASDAQ: TSLA) manufactures most of its electric vehicles for the European and U.S. markets in Alameda County.
Tesla also sued the county due to its coronavirus-related business restrictions. Those restrictions had limited Tesla’s production since March. At Musk’s orders, Tesla reopened production in its Fremont factory since Mother’s Day weekend. The company has been operating in defiance to the local health orders for several days.
The electric car manufacturer restarted production on May 19 against Alameda County rules. Musk said he would be on the line with his employees, adding that he should be the only one arrested.
Reopening of Tesla in California
Internal Tesla communications indicated that production shifts had fully resumed. However, the temp workers, various administrative employees, and other laborers who can work remotely were allowed to work from wherever they choose instead of coming to the Fremont factory.
Newsom is a Democrat. He alleged to have known Musk for decades. He also said that he has “great respect and admiration for Musk’s innovative spirit.” In his remarks, he indicated that California had been a significant partner to Tesla as the company grew to become the leading player in electric vehicles globally. Governor Newsom added:
“I think it’s in all our interests to continue to find areas of common ground, and that’s, by the way, exactly what we do in the state of California with Tesla. And they were accommodated, and they began reopening as manufacturing and logistics, and warehousing all across the state has operated and reopened in the last few weeks.”
Newsom spoke as Tesla looks for a location to launch its new final assembly plant. Reports emerged on May 15 that the company was considering Oklahoma and Texas. Musk said that the next plant would be the company’s ‘Cybertruck’ Gigafactory. Tesla is yet to respond to Newsom’s remarks.
Does Tesla Have Future in California?
Adam Jonas, a Morgan Stanley auto analyst, told reporters that he thinks the number of Tesla vehicles manufactured in California will drop in the coming years. He believes that it is economically hard to produce cars in the state. Jonas explained:
“There is no doubt in our mind that, over time, that Fremont’s proportion of global production will go down, and we think the next plant is going to be in Texas.”
Jonas was an early bullish Wall Street analyst on Tesla. On his part, Governor Newsom says that doing business in the State of California is beneficial for companies like Tesla. Although California may not be the cheapest place to do business, it has the best working conditions.
The Tesla CEO has been in the news lately after tweeting ‘recklessly’ according to the company’s shareholders. They even went to court; aiming to prevent Musk from using his personal Twitter account to disseminate information about the company. But, a Delaware judge has denied a request by the attorneys for Tesla shareholders to prevent the CEO from using his account.
But, the CEO went on tweeting resulting in the current unresolved cases. According to the shareholders, Musk’s continued tweeting poses a threat to Tesla’s existence. On May 1, 2020, Musk said that he thought the Tesla stock was overpriced; which made the share price to plunge sharply by over 10%. The shareholder attorneys said:
“No rational Tesla lawyer or director could have approved this tweet. Musk is unwilling to comply with the SEC settlements; and the board is equally unwilling or unable to require him to do so and constrain his tweeting.”
Tesla (TSLA) Stock
The Tesla shares (TSLA) closed May 19’s trading session slightly lower than the day before, at $808. The stock is still up 94% year-to-date, currently trading at $820 on May 20. TSLA has gained 1.5% in the past 24 hours, and all indicators suggest that there is room to move higher. With everything happening around the world and sales plunging, it seems like the Tesla shareholders and investors are unfettered.