Elon Musk threatens to move Tesla HQ over fight to reopen the company's Fremont factory

Tesla CEO Elon Musk announced on Twitter that he plans to sue California’s Alameda Country over a disagreement about the company’s factory reopening. Yahoo Finance’s Rick Newman joins the On The Move panel to weigh in on Tesla potentially moving its headquarters and future operations during the virus pandemic.

Video Transcript

- Well, another day of Elon musk being angry on Twitter. The Tesla head saying he's not happy about California still being shut and threatened to move his Fremont factory from California. Then there have been reports today that he's defying the shutdown order there. People are going to work at that factory. Rick Newman has been watching this for us. I mean, is it safe for people to be going back to work there?

RICK NEWMAN: Don't know, but I think this is a very visible case study in what the whole country's kind of going through, and we're going through more, which is, is it OK to go back to work or not? How do you even know when it's OK to go back to work? And if you're Elon Musk, you know that the big automakers now have a deal with the United Autoworkers Union, they're going to start up-- restart factories next week, and they're going to change the way they run the assembly lines and things like that. So Elon Musk probably is saying, why are they allowed to do it in Michigan and Ohio and other places in the Midwest, but my county here in California is telling me I cannot reopen? So apparently, he's forcing the issue. And people are going back to work today in Fremont, California, even though the county says Tesla is not permitted to open. It's pretty interesting, and this could heat up.

- Rick we talked a lot about liability issues that companies may face. Business is still lockdown for Fremont. Is there additional liability then for Tesla if workers do come down with COVID-19?

RICK NEWMAN: I mean, this is a test case. So what's going on in California is the governor, Gavin Newsom, has said it is OK for forced some businesses to reopen as long as they follow certain procedures. But he also said that if counties-- the counties can countervail that, if you will. So a county can overrule the state, which it's the opposite of what it is. Usually, the higher you go up in the governing structure, that's who supersedes.

So who knows? I mean, my best guess is that the county and Tesla will probably find a way to work this out, but-- without the litigation-- but it could end up being litigation. And keep in mind, this could escalate to the point to the Sheriff-- the Sheriff shows up and orders Tesla to shut down.

- Rick, where could he move it, though? If he were to leave California-- Lordstown? I mean, would he build a new facility like he did in China?

RICK NEWMAN: He's talked about moving to Texas before. You know, Elon Musk as a libertarian. He likes the business climate in Texas. But I do not think he can move the manufacturing-- I don't think-- I think he's bluffing on moving the manufacturing facility, at least in the short term. You cannot just pick up a factory and move it. And we know that Tesla has had a lot of issues getting their manufacturing smoothed out. And it would be a real setback to just pick up, and move, and risk all those manufacturing snafus was all over again.

Easier to move headquarters. You know, as we're all learning, headquarters can almost be virtual. So you could move a headquarters and the people could-- you know, the executives could fly around. But I'm not sure it would make sense to move the headquarters to someplace where you don't have a manufacturing facility.

- Rick, thank you. We should mention, by the way, those Tesla shares are down about 1.25%. In addition to this fight with California and Alameda county, the company also reported that Model 3 sales in China were down 64% in the month of April. Rick, thank you very much.