Leaving California, Elon Musk takes Tesla to Texas

8 Oct 2021

Image: © gguy/Stock.adobe.com

Musk previously threatened to move Tesla’s HQ to Texas or Nevada after falling out with California officials over Covid-19 regulations.

Tesla is moving its headquarters from Palo Alto in California, to Austin, Texas, months after threatening to leave the Silicon Valley state following disagreements with its local government.

In an annual meeting of stockholders yesterday (7 October), Tesla CEO Elon Musk cited high living costs and long commute hours as reasons behind the decision to move.

The company, which made a record profit of $1.1bn in Q2 of this year, is currently constructing a massive car factory in Austin. Musk’s SpaceX also has a launch site in Texas.

“I’m excited to announce that we’re moving our headquarters to Austin, Texas,” Musk told the annual meeting, held in the Texas factory. “There’s a limit to how big you can scale it in the Bay Area. In Austin, our factory is five minutes from the airport, 15 minutes from downtown.”

In December 2020, Musk told the Wall Street Journal that he had himself moved to Texas from California to focus on the new factory being built there.

‘Final straw’

In May 2020, Musk said that Tesla was filing a lawsuit against Alameda County in California – where its Fremont factory is based – after disagreements with the interim health officer over Covid-19 regulations that required the factory to be closed temporarily.

“Frankly, this is the final straw,” he tweeted. “Tesla will now move its HQ and future programmes to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future. Tesla is the last carmaker left in CA.”

However, Musk reassured shareholders this week that the move to Texas didn’t mark Tesla’s exit from California, announcing plans to increase output from Tesla’s Fremont and Nevada factories by 50pc.

“This is not a matter of, sort of, Tesla leaving California,” he said, adding that his employees found it hard to buy houses in and around Palo Alto, where median house prices are in the millions.

Earlier this week, Tesla was under fire for racism. Owen Diaz, a former elevator operator in Tesla’s Fremont factory, was awarded $137m in damages after a US federal jury found that Tesla failed to take reasonable steps to protect him from racial workplace harassment.

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Vish Gain is a journalist with Silicon Republic