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Musk and Tesla Putting 'Major Pressure' On Alameda County, Say Wedbush Analysts

The standoff between Alameda County and Tesla Inc.’s (NASDAQ: TSLA) CEO Elon Musk has become a nationa

Benzinga · 05/12/2020 09:16

The standoff between Alameda County and Tesla Inc.’s (NASDAQ: TSLA) CEO Elon Musk has become a national lightning rod against lockdown, say Wedbush analysts Daniel Ives and Strecker Backe.

The Standoff At Fremont 

The analysts noted that after Musk’s announcement, Tesla had restarted production in defiance of COVID-19 health orders in place throughout Alameda County, California. Now there is a direct standoff between the company and the local government.

Governor Will Play A Role

Ives and Backe are of the view that California’s Governor Gavin Newsom, who had no prior knowledge of the resumption in production, will likely be involved in trying to end the standoff. Local law enforcement may be called upon in hours or days to end the standoff. 

Situation Has Escalated 

Musk’s announcement upped the ante from Saturday when Tesla filed a lawsuit against the county while trying to reopen the shuttered Freemont factory. The Tesla CEO and the automaker are putting major pressure on Alameda. “This has become a national lightening [sic] rod situation around the lockdown,” said Ives and Backe.

Game of High Stakes Poker

Wedbush says there is no dearth of manufacturing locations or states offering tax incentives if Tesla moves its massive Model 3 operations and employee base. It would translate into a windfall for any potential new location. The analysts expect moving could take 12 to 18 months and would pose manufacturing and logistics risks to Tesla. They described the current situation as a “game of high stakes poker and Musk just showed his cards.”

Wedbush Maintains Neutral Rating

As all eyes turn to the response of Californian officials, Wedbush is maintaining its neutral rating on Tesla with a 12-month price target of $600.

Tesla Price Action

On Monday, Tesla shares traded 0.99% lower at $811.29.