Elon Musk has announced that Tesla will move its headquarters from California to Texas, following through on a threat he had hinted at for several months.
The company has been building a new plant in Austin and the CEO confirmed the move in a shareholder meeting on Thursday. He gave no timeline, however, and said the electric car maker will keep expanding its manufacturing capacity in the Golden State.
Musk noted that cost of housing in the Bay Area has made it tough for many people to become homeowners and that translates into long commutes. Last year, the tech company Oracle decided to move its headquarters from Silicon Valley to Austin, saying the move would give its employees more flexibility about where and how they work.
“We’re taking it as far as possible, but there’s a limit how big you can scale it in the Bay Area,” he said. “Just to be clear, though, we will be continuing to expand our activities in California. This is not a matter of leaving California.”
Musk stressed he plans to expand the company’s factory in Fremont, California, where Tesla’s Model S and Model X cars are built, in hopes of increasing its output by 50%.
The announcement drew cheers and applause from a small audience at Tesla’s manufacturing plant in Austin, where Musk delivered his remarks, which were webcast live.
Musk touted the company’s record vehicle deliveries this year, while noting that global supply-chain disruptions that have led to a shortage of computer chips remain a challenge.
“It looks like we have a good chance of maintaining that into the future,” he said. “Basically, if we get the chips, we can do it.”
As a result, production of Tesla’s angular Cybertruck pickup isn’t likely to begin before the end of 2022, Musk said, estimating that the company would reach “volume” production on the vehicle in 2023.
Musk had publicly clashed with California officials several times throughout the pandemic over local restrictions that halted production at the company’s factory. Musk said earlier in the year that he was spending less time in California and had already relocated to Texas himself.
In a December 2020 interview, Musk had some sharp words for his former home state. “If a team is winning for too long, they tend to get complacent,” Musk said, according to the Verge. “California has been winning for a long time, and I think they’re taking it for granted.”
Texas may appeal to one of the world’s richest men for its more lenient tax laws. It does not collect personal income tax, while California has some of the highest state tax rates in the US.
California Governor Gavin Newsom has defended the state’s economy and policies amid Musk’s decision.
“California is the birthplace of innovation, the fifth largest economy in the world, and home to the biggest ideas and companies on the planet – that success is not despite our progressive policies, but because of them,” said Erin Mellon, a spokesperson for Newsom, to the Washington Post.
Meanwhile, Texas governor Greg Abbott praised the decision, welcoming Musk and Tesla to the state.
“The Lone Star State is the land of opportunity and innovation. Welcome,” tweeted Abbott in reaction to the Tesla relocation news.
It is unclear if Texas’s recent near-total abortion ban – currently stayed by a federal judge – is an issue for Musk. The attack on women’s constitutional rights in the state has drawn scrutiny from other major businesses.
Last month, when asked if Texas’s new abortion law would hurt Texas economically, Abbott cited Musk. “Elon consistently tells me that he likes the social policies in the state of Texas,” said Abbott to CNBC.
Musk did not confirm what Abbott said but did post a response on Twitter. “In general, 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,” tweeted Musk.
