Tesla Drops Alameda County Lawsuit Over California Plant Reopening

Tesla Inc. (TSLA) has dismissed a lawsuit it filed against Alameda County to fight for the reopening of its Fremont auto plant amid the area’s shutdown order in place.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

The stand-off between the electric automaker and Alameda County came to an end this week after the California county health official reportedly approved the Fremont work plan and safety measures.

The decision came after Tesla’s CEO Elon Musk had filed a lawsuit against the county claiming that the lockdown orders have prevented the electric automaker from resuming operations at its California plant planned for earlier this month.

Even before the approval to resume operations, Tesla had restarted production defying Covid-19 health orders currently in place throughout Alameda County.

The outspoken billionaire also threatened to move the carmaker’s operations out of California to Texas or Nevada saying that if the company retains its “manufacturing activity at all, it will be dependant on how Tesla is treated in the future”.

The value of Tesla shares has more than doubled in the past two months. The stock rose 0.9% to $815.56 as of the close on Wednesday.

In reaction to the production resumption at Tesla’s main auto plant, four-star analyst Joseph Osha at JMP Securities cut the stock’s price target to $1,001 from $1,020, while maintaining a Buy rating, saying that capacity levels may not return to pre-Covid output seen this year.

However, Osha still expects Tesla’s 2021 deliveries at 445K for Model 3 and 207K for Model Y, adding that it is hard to see how Tesla cannot manage to grow 26% a year from its 2019 rate.

Overall, Wall Street analysts take a more cautious stance on the stock. The Hold consensus rating is based on 9 Sells, 9 Holds, and 8 Buys. Following the stock’s recent rally, the Street is less optimistic than Osha putting the average price target at $623.45, which implies 24% downside potential in the shares over the coming year. (See Tesla’s stock analysis on TipRanks).