It’s official, everybody: Elon Musk has decided to move the Tesla headquarters from California to Texas.
Elon Musk initially announced that he was going to move Tesla’s headquarters to Texas in May 2020, threatening to close the Fremont location “dependent on how Tesla is treated in the future”.
And furthermore, in an interview back in December 2020, Musk didn’t have very benevolent words for California. “If a team is winning for too long, they tend to get complacent. California has been winning for a long time, and I think they’re taking it for granted.”
Musk also had a significant clash in 2020 regarding San Francisco Bay Area’s health authorities’ enforcement of shelter-in-place orders.
But, as it turned out, this threat merely amounted to a tactic to increase output from Fremont.
Tesla’s Relationship with California
The New York Times has highlighted this move to Austin, Texas, claiming that this new change would result in a “blow to California”.
With regard to Tesla’s move to Austin, Musk denies having a hidden agenda. “Just to be clear, we will be continuing to expand our activities in California,” he said. “This is not a matter of sort of Tesla leaving California.”
On the 8th of October 2021, Tesla was reported to have agreed to lease its headquarters’ former location in Palo Alto. This lease will last for about a decade, where the building will fall under Hewlett Packard’s ownership with a lease to the Stanford University Board of Regents. It also completed an office expansion for 325,000 square feet.
Many are nonetheless wondering what the motivation is behind Musk’s decision to move Tesla’s headquarters out of California.
Why Would Elon Musk Move Tesla Out of California?
The Californian government has long supported Tesla via state-funded benefits. State statistics reported that Tesla purchasers received a whopping amount of $334.7 million in state rebates between 2010 to the beginning of 2020. Tesla purchasers were also qualified for rebates by utility companies. And, stemming from the state’s environmental rewards, the price of a Tesla vehicle could potentially be reduced by $13,000 – depending on the customers’ level of income and location.
On the other hand, Texas doesn’t quite offer the same benefits. But the state does outdo California where tax abatements and handouts to Tesla are concerned. Texas’ tax laws are also laxer, where it doesn’t collect personal income tax.
In a tweet by Texas governor Greg Abbott, he welcomed this move by stating, “The Lone Star State is the land of opportunity and innovation.”
Abbott also told CNBC that, “Elon consistently tells me that he likes the social policies in the state of Texas.”
Musk neither confirmed nor denied this statement. Instead, he tweeted in response, “I believe government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness. That said, I would prefer to stay out of politics.”
New Changes, New Outcomes
The new Texas headquarters will be located a mere 5 minutes from the airport. While Tesla’s growth will be resumed in California, Musk is determined for it to grow exponentially more in its new home. Texas must indeed promise a whole lot of opportunities for the electric vehicle giant. Why else would Elon Musk move Tesla’s headquarters out of California?
What impact this move will truly bring to both California and Texas remains to be seen.