Elon Musk says Tesla is restarting California production, defying local order

By Tim Higgins

(The Wall Street Journal) – Elon Musk said Tesla is resuming production of cars at its lone U.S. assembly factory in defiance of local authorities in what is quickly becoming one of the highest-profile showdowns between business and government about reopening after weeks of sheltering-in-place.

The announcement Monday on Twitter supercharged a standoff over government orders that the company’s California plant remain closed as part of efforts to slow the spread of Covid-19 even as other parts of states are emerging from quarantines. Mr. Musk has a colourful history, but his stance was brazen even by those standards.

“I will be on the line with everyone else,” Mr. Musk, who is Tesla’s chief executive, wrote on Twitter. “If anyone is arrested, I ask that it only be me.”

Tesla stopped production on March 23 at the Fremont, Calif., factory, which builds the hot-selling Model 3 compact car and employs more than 10,000 people, after initially balking at Alameda County’s order for nonessential businesses to close.

After learning Tesla reopened, the county health department said Monday that it had notified the company that it can only maintain “minimum basic operations” until it receives approval of a plan to reopen. Tesla is expected to submit a site-specific plan Monday, the county said.

“We hope that Tesla will likewise comply without further enforcement measures,” the county said in a statement.

Alameda County has reported more than 2,000 cases of people infected with the Covid-19 virus through Sunday, including 71 deaths from the disease.

Several states have experienced protests associated with lockdown orders. States are reopening on different timelines, with little consensus. Some people have been arrested for defying the orders, such as a Dallas beauty-salon owner and other small businesses, but no corporate leader of Mr. Musk’s profile has taken such dramatic action.

Even before Mr. Musk’s tweet, Tesla workers who had been furloughed said they were being told to report to work this week. The company said on Saturday it was preparing to resume operations without giving a timeline.

Mr. Musk’s actions to get workers back on site set him apart from many of his counterparts in Silicon Valley. Companies such as Facebook Inc. and Google-parent Alphabet Inc. were early movers in March to shift employees to remote working to help stem the spread of the disease. The two tech giants have told most employees they won’t be asked to return to offices for months. For Tesla that’s not as easy. It needs workers at its plant to make cars, whereas employees for Facebook, Google and many other tech companies can mostly do their job from home.

The defiance Monday came after days of increasingly tough talk and action by Mr. Musk.

On Saturday, Tesla filed a lawsuit in federal court asking a judge to allow it to reopen the factory, arguing in part that Alameda County had overstepped its power in blocking the operational resumption even as the governor started letting manufacturing in the state to restart last week. Mr. Musk blasted the county’s move and said over the weekend he was going to move the Palo Alto-based company’s headquarters out of state.

The CEO announced Tesla’s production plans shortly after California Gov. Gavin Newsom held a call with media during which he was repeatedly asked about the auto maker, including about photos of the Fremont factory’s parking lot showing it full of cars, possibly indicating there was activity at the site.

Mr. Newsom said he expected Tesla would be able to resume car manufacturing as early as next week at the plant.

During the press call, Mr. Newsom backed the county’s plan to phase in nonessential businesses. “I have great expectations that we can work through at the county level the issue with this particular county and company in the next number of days,” he said.

Mr. Newsom also said he expected ties between Tesla and California to remain strong despite Mr. Musk’s threat to move. “I have more confidence moving forward in our ability to support a company that this state has substantively supported for now many, many years, and in return we have been beneficiaries of their incredible growth, ingenuity and innovative spirit. We look forward to many, many decades of that relationship.”

Shortly before the start of the daily briefing, which was disseminated on social media, Tesla board member Kimbal Musk, the CEO’s brother, was critical of the governor on Twitter. “The governor has enormous power,” he wrote. “He chose to put it into the hands of the county and he can take back that decision. This is on @GavinNewsom entirely. Deciding the future of @tesla on the whim of a part-time interim health director was his decision and he can easily revert it.”

“This is a game of high-stakes poker and Musk just showed his cards; now all eyes move to the response from Alameda County and potentially California State officials over the next 24 hours,” Dan Ives, an analyst for Wedbush, said in a note to investors in which he called Mr. Musk’s move “shocking.”

Before announcing work would resume Monday, Mr. Musk was on Twitter lamenting the fact that Michigan had allowed manufacturing to resume. “This is insane,” he wrote.

Auto rivals General Motors, Ford Motor and Fiat Chrysler Automobiles NV plan to resume production at their North American factories next Monday.

As the coronavirus began to threaten the US earlier this year, Mr. Musk was dismissive of efforts to contain it, musing on Twitter that measures being taken to combat the Covid-19 outbreak were more harmful than the virus.

The shutdown in March interrupted Tesla’s ramp-up of production for its newest vehicle – the Model Y compact sport-utility vehicle – that Mr. Musk has said could become the company’s bestseller. Tesla was able to surprise Wall Street late last month in reporting a first-quarter profit but didn’t reiterate a stated goal of boosting deliveries this year by more than 36%, saying it was too difficult to predict anything for the time being.

The company had aimed to reopen the factory on May 4, the day after the county order was scheduled to lift; but the measure was then extended through May. Mr. Musk vented during a public conference call with analysts, equating such orders to fascism. Last week, he said he thought the efforts a violation of civil liberties that wouldn’t hold up in court.

The company and county officials have been working to broker an agreement to resume work. The auto maker said on Saturday it had crafted a plan over months that would ensure worker safety at the factory, including measures to ensure social distancing and extra employee training. The measures were modelled, the company said, after steps it has taken at its Shanghai factory, Tesla’s only other car-making plant.

Mr. Musk has long made defiance a cornerstone of his business, taking to Twitter or the media to tangle with critics, government leaders or anyone he felt threatened Tesla. In 2018, for example, amid a safety investigation into a Tesla vehicle, Mr. Musk suggested the National Transportation Safety Board was more interested in headlines than safety.

His latest battle has put him at odds with some in Tesla’s home state. California Assemblywoman Lorena Gonzalez over the weekend wrote on Twitter: “F*ck Elon Musk.” Robert Reich, a former US labour secretary who teaches at the University of California, Berkeley, tweeted: “Elon Musk threatens to take away people’s jobs unless he’s allowed to risk their health. Capitalism at its worst.”

– Timothy Puko contributed to this article.

Write to Tim Higgins at [email protected]