Gavin Newsom not worried about Elon Musk moving Tesla from California

California Gov. Gavin Newsom told CNBC on Tuesday that he is “not worried” about Tesla CEO Elon Musk moving the company’s operations out of the state. 

“I’m also not worried about Elon leaving anytime soon,” Newsom said in an interview that aired on “Fast Money.” 

“I’ve had a lot of conversations with him, and 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.”  

Musk said earlier this month on Twitter that he was prepared to move Tesla’s headquarters and future operations out of California amid a dispute with public health officials in Alameda County, where the electric vehicle maker manufactures most of its cars for the U.S. and Europe.

Tesla also sued the county over its coronavirus-related business restrictions, which had limited Tesla’s production since March. At Musk’s behest, Tesla reopened for production has been making new cars at its Fremont factory since Mother’s Day weekend, and was operating in defiance of local health orders for days. 

As CNBC previously reported, internal Tesla communications showed that production shifts had fully resumed, minus some temp workers and some of the administrative and other employees who were still able to work remotely, rather than coming in to the Fremont factory.

Newsom, a Democrat, said he has known Musk for decades and had “great respect and admiration for his innovative spirit.” He argued that California has been a key partner to Tesla as it grew to become the world’s leading player in electric vehicles. 

“I think it’s in all our interests to continue to find areas of common ground and that’s, by the way, exactly what we do in the state of California with Tesla,” Newsom said. “And they were accommodated, and they began reopening as manufacturing and logistics and warehousing all across the state has operated and reopened in the last few weeks.”

Newsom’s comments come as Palo Alto-based Tesla scouts for a location for its new final assembly plant. CNBC reported last week that the company was zeroing in on Texas or Oklahoma. Musk has said the next plant will be the company’s “Cybertruck” Gigafactory. 

Tesla did not immediately respond to a request for comment on Newsom’s remarks. 

Morgan Stanley auto analyst Adam Jonas told CNBC last week that he believes the share of Tesla vehicles produced in California will shrink in the coming years. He said it is economically “challenging” to produce vehicles in the state.

“There is no doubt in our mind that over time, that Fremont’s proportion of global production will go down and we think the next plant is clearly going to be in Texas,” said Jonas, one of the earliest bullish Wall Street analysts on Tesla. 

Newsom said he was believes doing business in California is advantageous for companies, including Tesla. “We may not be the cheapest place to do business but we’re the best place to do business,” he argued.  

Shares of Tesla closed Tuesday’s session slightly lower at $808 each. The stock is up 93% so far this year. 

– CNBC’s Lora Kolodny contributed to this report.