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Tesla reportedly restarts production at Fremont factory

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On Saturday, Tesla filed a lawsuit against Alameda County for not allowing the company to restart operations at its factory based in Fremont, California, and CEO Elon Musk threatened to move Tesla’s headquarters to Nevada or Texas. By Monday, multiple reports emerged that employees were spotted at the factory, and that Tesla began making cars again. The Final Round panel discusses what’s next for the automaker.

Video Transcript

MYLES UDLAND: All right, welcome back to "The Final Round" here on Yahoo Finance. Myles Udland with you in New York. Let's take a look now at what is going on in the world of Tesla today. Always news when it comes to Elon Musk, but over the weekend, tensions continuing to flare between the company and lawmakers in California. And it has led to Musk threatening to move the company's headquarters to Nevada or Texas, in his words, immediately.

Melody Hahm, this has been I wouldn't even say under the surface. There's been clear tension between Tesla and the state of California, the forced shutdown of the Fremont factory around coronavirus, Elon Musk is not happy with that. I think his view on the virus itself is not exactly within the mainstream medical communities. I think it's fair to say at this point, it-- I don't know. Does it seem to you like this is the one, that something is really going to change this time?

MELODY HAHM: Well, it's interesting, Myles, because on Friday, as we know, Governor Newsom did open up a lot of retail, ranging from bookstores to toy stores and some manufacturing. So Elon Musk had obviously been at the forefront of wanting the Fremont factory to reopen. As we know, that was quickly shut down, and that idea was seen as very harmful to the employees involved.

I do think that ultimately, the county, Alameda County, wants to keep Tesla. No brainer. Manufacturing jobs are few and far between already. A lot of the middle class folks based in Alameda depend heavily on that plant. There are about 20,000 total employees in the state of California for Tesla. I think 10,000 are in the Fremont factory alone.

So as you say, yes, this is not really surprising. Elon Musk continued rhetoric, but at the same time I do not think that local California officials, even if Governor Newsom is not really sympathizing with Musk, I don't think they'll just let him leave so easily.

As we can tell, the charm offensive is on, though, from states like Texas and Nevada. Texas alone, just seeing on Twitter right now, the number of local officials and judges and county folks who are saying, please come with official letters saying, we have everything in place ready for you to come. Our tax rate obviously is so much lower than California. You will benefit so much more by being here. Elon Musk responding to some of them, saying, duly noted. Thank you. We'll consider this.

I think it's still too early to say that Elon Musk will make that impulsive decision to leave California, especially because a lot of the engineering minds, of course, are based in California. I do not know if they'll relocate to Texas just to work for him.

DAN ROBERTS: And guys, do we really think this is going to happen? I mean, as Melody said, it's not just about so many workers already being in California. Melody, you used the word impulsive, and I agree. I mean, Elon Musk says a lot of things. And right now, he's annoyed and impatient and wants to reopen the factory, but it's hard to see the moving of the headquarters happening.

MYLES UDLAND: I think, though, that if there's one executive who would do it, it would kind of be him. I mean, you know, Dan Ives in his note on this exact topic, which I think he published over the weekend, he's saying that, you know, there's a risk to Tesla's logistics over 12 to 18 months if they actually go ahead and do move the factory.

But I don't see any scenario in which Elon Musk doesn't find many reasons to say don't worry about the slight interruption. Like, we've got the Shanghai factory. We can continue to-- you know, once they have operations in Germany going presumably, those are alternative ways for Tesla to make cars. They were making cars in tents last year.

So if they have a bunch of tents in Texas, I guess, for a few months, maybe it's going to be fine. I could see Elon doing this because-- I don't know-- it's just, it's a very Elon thing to say I don't like the place where I've always been. And so I will pick up my ball and go home, or I guess [INAUDIBLE] in Texas.

MELODY HAHM: Yeah.

[INTERPOSING VOICES]

DAN ROBERTS: Yeah.

MELODY HAHM: Go ahead, Dan.

DAN ROBERTS: Well, the embarrassing scenario is you imagine him doing it, [INAUDIBLE]. And finally, California reopens while he's-- now they're in the process of getting things up and running as the new headquarters is somewhere else. And it's sort of like, OK, if you had just waited.

MELODY HAHM: Yeah, I wanted to point out, especially as we talk about the shape of these so-called recoveries, the W, the V, everything in between, especially if we see a W. And to be honest, regardless of what the recovery looks like, you can't just reopen a factory at its full capacity, right?

So even if Texas is saying, yay, we're open, and you're free to move however you want, guaranteed in a manufacturing plant there will be additional cases. That's just undeniable when you have people in those kinds of close quarters. So to Dan's point, I think it would be foolish of him.

And Ives points out in this note, he says it will be 12 to 18 months for this to actually happen, kind of humoring Musk's idea if he were to relocate, I don't think that'll be an end all, be all situation, right? I think there would be a lot of upfront costs that he'll incur that perhaps retrospectively, a lot of investors will shake their head at.

MYLES UDLAND: All right. All right. Let's take a bet. Let's take a bet, the three of us. I think Tesla will move their headquarters to Texas.

MELODY HAHM: Whoa. You're not giving yourself other states? It's just going to be Texas?

MYLES UDLAND: I'll just pick Texas.

DAN ROBERTS: Yeah, why not Nevada? It's all happening in Vegas right now.

MYLES UDLAND: I'm picking Texas. What's your bet?

MELODY HAHM: I think Elon will stay, at least for-- I mean, I don't think he'll be leaving in the next six months.

MYLES UDLAND: Oh, this is, like, in Jan-- OK, fine. All right.

MELODY HAHM: Yeah, we have to say the timeline. What's the--

MYLES UDLAND: I know. We didn't do the parameters. We didn't do the size of the bet. No one's getting odds, fine.

DAN ROBERTS: Next let's do whether MLB comes back in 2021.

MYLES UDLAND: No, no. No, no, they do that in the commercial breaks. All right, so there it is. I say Tesla moves. My two co-hosts say Tesla does not. All right--