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Newsom says he's 'not worried' about Tesla leaving California soon

Rex Crum, The Mercury News on

Published in Automotive News

SAN JOSE, Calif. -- As Tesla is back and cranking up production at its vehicle manufacturing plant in Fremont, Gov. Gavin Newsom has said he isn't worried about the electric carmaker abandoning California in the near future.

Newsom made his comments late Tuesday during an interview on CNBC. Newsom said he has known Tesla Chief Executive Elon Musk for several years, has a good relationship with Musk, and that he believes it remains in the interest of Tesla, and California, to continue working together in order to support the state's economy and promote the growth of electric automobiles.

"I'm not worried about Elon leaving anytime soon," Newsom said, and added that, "We're committed to the success and the innovation and the low-carbon, green growth economy that he's been promoting for decades and the state of California is accelerating in."

Newsom's comments came after Tesla reopened its Fremont plant following a dispute with Alameda County over the company violating the Bay Area-wide shelter-in-place order that closed many businesses in a effort to tamp down on the spread of coronavirus. The county signed off on allowing Tesla to restart vehicle manufacturing, but not before Musk said last week that he would reopen the Fremont plant with or without the county's approval. Tesla also sued Alameda County for violation of due process, and Musk said he would be on the assembly line with Tesla employees when production began.

Musk also turned up the heat last week when he tweeted that because of Alameda County's actions, he would consider moving Tesla's manufacturing operations out of California and to either Texas or Nevada. Reports then said Tesla was planning on building its next Gigafactory in either Texas or Oklahoma.

"They were accommodated," Newsom told CNBC. "And they began reopening as manufacturing and logistics and warehousing all across the state has operated and reopened in the last few weeks."

Tesla's presence in the Bay Area isn't insignificant, as the company employs about 10,000 people at its Fremont location.

 

Tesla's plans to build a new factory in the United States are not surprising. In March, Musk tweeted that Tesla was scouting locations in the central U.S. for a Gigafactory where it intends to build its upcoming Cybertruck.

Gene Munster, managing partner at Loup Ventures, said that it should come as no surprise that Tesla would move some of its manufacturing out of California because the company needs more factory space as it expands its lines of vehicles. However, Munster said the logistics of building cars are such that Tesla couldn't immediately abandon Fremont even with a new factory somewhere else.

"Tesla is going to be making cars in Fremont for at least five years," Munster said. "The company can't scale production in new facilities to meet demand, so moving away from Fremont in the next five years would be a mistake, and give oxygen to other automakers trying to catch up to Tesla."

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