Tesla CEO Elon Musks threatens to move HQ out of California

Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Rick Newman discuss Tesla CEO Elon Musk’s threat to move company headquarters, and the automakers that are set to reopen over the next few weeks.

Video Transcript

BRIAN SOZZI: Tesla CEO Elon Musk is not happy after Alameda County, California-- or not happy with Alameda County, California. Local officials have refused to let the electric carmaker re-open its Fremont factory. Musk filed suit against the county and threatened to move Tesla's HQ to Texas or Nevada.

Yahoo Finance senior columnist Rick Newman is here with us. Rick, this really blew up over the weekend. What side do you fall on? Who's right, who's wrong?

RICK NEWMAN: I think Elon Musk maybe has a point here. And this reveals the tension that we're going through in many places as we're trying to figure out, how do we reopen without letting this virus regain a foothold? So the governor in California has said businesses can reopen under, you know, some strict guidelines for how they operate.

But counties can be more strict than that. And Alameda County has said, we're not ready yet. So Elon Musk itching to get that factory going again. And the county saying, no, you can't.

And they did not really tell him when he can reopen or what he has to do in order to reopen. And he's saying, look, this is just a couple of public health officials applying arbitrary decisions to one company. We need to get back to business.

You know, this is-- a lot of businesses in a lot of states are going to be in a situation like this, where they think they can probably start operating again without getting anybody sick or causing a public health crisis. But public health officials aren't sure. So we're going to have-- I mean, we're just inching our way back and kind of feeling our way along in the darkness here.

ALEXIS CHRISTOFOROUS: You know, Rick, today we heard from AutoNation. And while, you know, earnings took a big hit, the CEO said he is seeing people become more comfortable with buying a car online, sort of sight unseen, right? I mean, the whole idea of taking the car out for a test drive and, you know, getting that new car smell really isn't happening right now. What do you think it's going to mean for other dealers, I mean, outside of an AutoNation, with the way we as Americans are going to buy our cars going forward?

RICK NEWMAN: I'm doing some reporting on this right now. I've been talking to people who've bought cars recently and also dealers. And a lot is changing.

You know, you never-- in the last, let's say, 10 or 20 years, with so much stuff online now, and email, and text, you really didn't have to go to a dealer for anything, unless you needed to test drive the car. And now that a lot of dealers can't let people in, or they can only let people in by appointment, they're figuring out new ways to sell cars. And that means negotiate with buyers over the phone, by email, by text.

Don't try-- you know, the old way of doing it was, get them in the showroom so you can upsell them. And you know, see if you can keep them around for two hours and keep adding stuff to the deal. They're not doing that anymore.

And this is actually turning out to be good for consumers. If you need to do a test drive, you can go to the dealer. You're not going into the dealership these days.

Somebody meets you outside. They bring you the car. For the most part, they don't ride along with you. You just take the car for a test drive and do it that way. So this is actually a much better way to buy a car. And it'd be great if some of these things stuck around after coronavirus.

BRIAN SOZZI: Yeah, Rick, the last thing I need is Joey the used car salesman sending me a text to buy his latest hooptie. But you know-- [CHUCKLES] --a lot of these automakers, they're going to restart operations in about a week or so. And my sense, just covering them and listening to the executives-- they're ready to pretty-- they're ready to start churning out cars, perhaps pretty aggressively. But why are they doing that? These dealer lots still have a ton of inventory on them.

Actually, not all the dealers do have a ton of inventory. So I've been interviewing buyers. And some of them say, I went to the dealer figuring I was going to be able to get a great deal, but they don't have any cars.

So it's not just that the assembly lines have shut. The ports have already shut. And assembly lines overseas have shut. So imported vehicles aren't coming in either.

You know, so Elon Musk kind of has a point. I mean, a lot of the automakers that are reopening next week, they're in the midwest. Michigan has a huge problem with the coronavirus.

And they've had very strict lockdown rules. And the governor there has found a way to allow the automaker plants to reopen. So Elon Musk is probably looking at that and saying, hey, what about me? Why are we just waiting to hear the word when other parts of the country are getting back and up and running?

ALEXIS CHRISTOFOROUS: Hey, Rick, what do you think-- I mean, it's not easy to just pick up a car manufacturing plant and move it. But I mean, longer-term, Elon Musk is bringing up an interesting question for automakers. Do they start to move their operations to states that are going to have a better shot at having things be normal post this pandemic?

RICK NEWMAN: I think he's totally bluffing about moving the existing operation out of California. I mean, that's a huge undertaking. And if you think about all the difficulty Tesla went through getting that manufacturing operation running smoothly, I can't imagine they would just pick it all up and start over someplace else.

Plus you have to hire people. But I think it's plausible that, as they expand, they probably won't put new facilities in California. They probably do need to build another battery factory. So that could go someplace like Texas, or anyplace else.

And then, over time, they could gradually move stuff out of Florida-- excuse me, California-- into someplace else. But they're not going to do that overnight. There's no way.