Newsom has already backed down, handing it off to Alameda county. I expect they'll cave next. Both the state and local govts need the tax dollars, desperately.
California is a very unfriendly environment for business as is (trust me on this, I know first hand.) If they drive Tesla out, they'll have a hard time getting another company of that size, and tax revenue generating capability, again.
Musk has leverage, and he knows how to use it.