Elon Musk follows through on his warning, after clashing repeatedly with Californian officials last year, and moves Tesla’s corporate headquarters to Texas
California has suffered another business blow, as Tesla became the latest big name corporation to announce it is ‘leaving’ the golden state.
CEO Elon Musk at a shareholder meeting on Thursday, held at Tesla’s vehicle assembly plant currently being built near Austin, confirmed the HQ relocation move.
The decision to relocate Tesla’s headquarters away from California’s Bay Area however, will not result in the closure of California’s last remaining car factory, namely Tesla’s plant in Fremont, California.
Indeed, Musk made clear that production at the Fremont, and Giga Nevada facilities will continue to grow.
“I’m excited to announce that we’re moving our headquarters to Austin, Texas,” Musk was quoted by Reuters as telling the company’s annual meeting. “This is not a matter of, sort of, Tesla leaving California.”
“To be clear we will be continuing to expand our activities in California,” Musk added. “Our intention is to increase output from Fremont and Giga Nevada by 50 percent. If you go to our Fremont factory it’s jammed.”
But Musk was clear about the problems that California is now posing for big businesses.
California despite its ‘Golden State’ nickname, has a number of issues. Not least of which is its very high cost of living (i.e notoriously expensive house prices), as well as commuting difficulties.
Another factor is that California also has a high personal income tax rate, while US states such as Florida and Texas have none.
And there are frustrations with the governance of some cities and the state itself.
“It’s tough for people to afford houses, and people have to come in from far away,” Musk reportedly noted. “There’s a limit to how big you can scale in the Bay Area.”
The decision to move Tesla’s headquarters away from California to Texas should come as little surprise.
In December last year, Elon Musk, who had lived in Los Angeles for 20 years, announced he had left California after he had sold his Bel Air homes.
Musk personally relocated to Texas.
But in 2020 Musk had threatened to move both the Tesla factory and its headquarters out of California altogether, to Texas or Nevada, after he clashed with officials in Alameda County over the re-opening of Tesla’s factory during the first Californian Covid-19 lockdown.
His threat to pull the factory of the world’s most valuable carmaker out of California was not realised, after Musk was allowed to re-open the Fremont factory early.
However he has now followed through on his threat to move Telsa’s headquarters out of California.
And Tesla is not the only big name business to leave California.
Hewlett-Packard Enterprise (HPE), one of the founding fathers of California’s tech homeland of Silicon Valley, in 2020 announced it was leaving the ‘golden state’ and moving its headquarters to Texas.
HPE was a real founding father of Silicon Valley, as it was created in the 2015 split of tech veteran Hewlett-Packard Co, which was founded in 1939 in a Palo Alto garage.
Software giant Oracle then followed suite, when it confirmed the move of its corporate headquarters from California, to the Lone Star State of Texas.
A number of other firms have already left the San Francisco Bay Area, including follow car maker Toyota Motors; data-mining provider Palantir Technologies; e-cigarette maker Juul Labs; and Charles Schwab.
Texas is already home for other tech firms such as Advanced Micro Devices (AMD), and Dell, among others.