California often sets standards that get adopted elsewhere/nationally not because it's some magical state but because of the sheer size of its economy. It used to be quite common that auto manufacturers would build a CA-approved version for their vehicles until it became too costly to maintain two versions. Some manufacturers still do this for vehicles that have a higher portion of their sales outside CA (mostly large trucks). Regardless of whether or not you approve, CA definitely sets the nation standard on fuel efficiency for general consumer vehicles.

That said, if you're going to build a company in the American capitalism model where you inevitably interface with different layers of government, you probably would want to do it where those governments align best with your industry. If your goal is to build a car, MI is probably your best bet. If your goal is to solve fuel efficiency or an environmental problem, CA is one of the better places to be in; though maybe not the best. If your goal is to get people back to work ASAP, you'd want to go to a state with few(er) worker protections.

I think it's clear where Musk's motivations lie, but I'm sure others are unconvinced.