i don't know why this comment is being downvoted. He's absolutely right about every word. Fremont is not a place to be building cars. If you're gonna build in the US, Tesla could have chosen almost any other city in the US and gotten labor cost that was 33% cheaper.
Software companies can afford the higher labor cost in the bay area because they tend to have really large margin when they win. Car companies have very very low margins, even when they win, so they really need to pay attention to things like labor cost. This is a huge mistep for Tesla and shows poor judgement on Elon Musk or whoever decided to do it in Fremont.
They bought the old NUMMI factory that used to make GM and Toyota cars. It was active right up until they bought it in 2010 (they announced the sale a month after NUMMI closed) so my guess is they were able to accelerate early progress because of that purchase.
In the long run, I'd agree, the expense vs. reward calculation doesn't make sense now. But GM and Toyota successfully used that plant for something like 30-50 years before that and there was a whole community of auto workers living around it, so I'm not sure I'd say that was poor judgment for them at all.
Nobody expected housing prices to go up 100%+ over the last few years. 2010-2015ish was a real estate boom period for Valley workers if anything. You had post-recession housing fire sales; AirBnB wasn't big enough yet to incentivize empty houses; Google, Apple and FB didn't quite own the entire Menlo Park->Sunnyvale corridor yet; etc. Good times.
Software companies can afford the higher labor cost in the bay area because they tend to have really large margin when they win. Car companies have very very low margins, even when they win, so they really need to pay attention to things like labor cost. This is a huge mistep for Tesla and shows poor judgement on Elon Musk or whoever decided to do it in Fremont.