By on October 8, 2021

Tesla CEO Elon Musk has officially announced that his company would be moving house this week. Currently nestled upon the bosom of Silicon Valley in Palo Alto, CA, the automaker has expressed its intent to establish a new base of operations in Austin, TX. While this situation has been a long time coming, it’s not quite the prompt walkout that everyone was predicting 17 months ago.

At the start of the pandemic, Musk found himself at odds with local officials pushing strict COVID lockdowns. The CEO had wanted to keep the all-important Fremont facility up and running at the start of 2020, suggesting workers could simply choose to stay home without there being any negative repercussions (or pay). Told again to shut down, Tesla sued Alameda County on the grounds that its orders were unconstitutional and violated a return-to-work mandate recently issued by Governor Gavin Newson. Before long, Elon Musk was openly confessing he was fed up with the state of California and would be relocating the business

“The unelected [and] ignorant ‘Interim Health Officer’ of Alameda [County] is acting contrary to the Governor, the President, our Constitutional freedoms [and] just plain common sense,” Musk tweeted in May of 2020. “Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately.”

While the CEO found new allies in the state, ire from some Californian officials grew to a point where it became routine to see them cursing him out online. But the fracas also encouraged the State of Texas to start talking business. Musk had previously hinted that he was interested in building a facility there and Lone Star State began offering bigger tax breaks and less regulation than what would be allowed in California.

One year later, the courtship appeared to have paid off. News broke that Tesla was quietly launching projects in Texas via its Gambit Energy Storage subsidiary and everyone started to wonder how long before the brand abandoned its coastal home.

But it’s not going to be Texas Or Bust. Despite Elon Musk’s prolonged spell of crapping on the state that has been Tesla’s home since its founding in 2003, he noted that the company will continue operations there. Freemont Assembly (which currently manufactures the Model S, Model 3, Model X, and Model Y) will remain active, with the CEO stating that Tesla hopes to expand its production capacity by 50 percent. The same was said of its Nevada Gigafactory.

Truth be told, the taxation and regulatory situation probably plays a much larger role than anyone wants to admit. Elon may not like Californian politics, but the automaker has a vested interest in the Golden State and sells the brunt of its product there. There’s little reason to burn a bridge when you’ll be the one that has to pay for it.

“We will continue to expand our activities in California,” he told investors on Thursday, “This is not a matter of Tesla leaving California.”

There’s no reason to doubt him on the claim. In addition to repeated expansions of the Fremont plant, Tesla recently broke ground on a new facility based in Lathrop, CA. The site will be responsible for constructing the company’s new Megapacks, which it believes will catapult it into the burgeoning energy storage business. But Tesla’s new headquarters will be in Austin and likely to keep future investments allocated somewhere between America’s coastlines.

[Image: Jag_cz/Shutterstock]

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36 Comments on “Tesla Officially Moving to Texas, Elon Musk Confirms Austin HQ...”


  • avatar
    dal20402

    This is about Elon’s tax bill, no more, no less.

    If the Franchise Tax Board has any balls, it will send an investigator to figure out exactly how many nights Elon spends in Texas, California, or somewhere else, and then send him a state income tax bill. I’ll give it ten to one that he actually spends more nights in 2022 in California than Texas.

    • 0 avatar
      28-Cars-Later

      Musk can afford the best firms (like yours), I don’t think he’ll be sweating it.

      • 0 avatar
        dal20402

        One thing about working with clients like him is that we can advise them, but they don’t always take the advice. They tend to do whatever they want.

        I’m sure his people have received ten different memos on letterhead telling them that he needs to have his head on a pillow in Texas for 183 nights in order to take advantage of Texas’s lack of income tax. But in the end, no one can control him but him, and he’s not a guy known for following prudent professionals’ advice. (Just see any one of his many stock-price scandals for evidence.)

    • 0 avatar
      MitchConner

      Nope. California has over 500 regulatory agencies. The cost of living there is nuts. Workers in the Fremont plant have 90 minute commutes because the cost of housing in the Bay Area is nuts — and all that gets you is a place in a dump like Stockton — with its lousy schools and rampant crime.

      Lived in Silicon Valley for 39 years. Was cool until the turn of the century then the quality of life fell off a cliff.

      Musk may be many things — but he isn’t stupid. He, like Larry Ellison and over 6 dozen companies hit the eject button on that piss poor joke of a state for greener pastures — and they were wise to do it.

    • 0 avatar
      EBFlex

      “ If the Franchise Tax Board has any balls, it will send an investigator to figure out exactly how many nights Elon spends in Texas, California, or somewhere else, and then send him a state income tax bill. I’ll give it ten to one that he actually spends more nights in 2022 in California than Texas.”

      Sounds like something that that sh*t hole state would do. Punish anyone for having the audacity to do something that helps the business and not the dictatorial state government.

      • 0 avatar
        dal20402

        Glad to see the conservative contingent here is consistent with their orange Dear Leader in believing that tax laws are for the little people and people shouldn’t be bothered with following them.

        • 0 avatar
          EBFlex

          Please, oh smug liberal, show us where anyone stated that people shouldn’t follow tax law. We’ll wait.

          Further, please show us how moving a headquarters is somehow against tax law. Again, we’ll wait.

          • 0 avatar
            dal20402

            If you had the reading comprehension of my neighborhood crows, you’d figure out that the lawbreaking I’m talking about isn’t moving a headquarters, but telling the tax authorities you live in one place while actually living in another.

            It’s illegal to spend the majority of your time in California and not pay California income tax, and I think that is exactly what Elon is trying to do here. Maybe he’ll actually spend 183 nights a year in Texas, but I’ll believe it when I see it. Elon is gonna get bored in Austin after about a week.

          • 0 avatar
            EBFlex

            As expected, we’re all still waiting.

            “and I THINK that is exactly what Elon is trying to do here.”

            That says it all folks (emphasis added). People think the earth is flat too. Here’s a little advice for you and the rest of the kiddos in the sandbox….less think more proof.

    • 0 avatar
      aja8888

      Smart CEO’s don’t pay themselves much of a salary. Most of their compensation is in equity. They don’t worry about a tax bill.

  • avatar
    Fred

    25 years ago my company moved from Oakland CA to Houston TX and about 50 of us moved with them. Within a year half moved back. Mostly because of the weather and family. I stuck it out until retirement, but now I’m back in California, again mostly for family reasons. So maybe it’s not the panacea you hope for.

  • avatar
    SCE to AUX

    From CNN’s account of it:
    “The electric car company is currently based in Palo Alto, California, near its original headquarters in San Carlos, and its first factory, in Fremont. Musk said Thursday that there is a ‘limit to how big you can scale in the Bay area.’

    He cited housing affordability and the long commutes it can create as hurdles for its current location, and said the Austin factory is five minutes from the airport and 15 minutes from downtown. The median home price in Palo Alto is $3.3 million, according to Realtor.com, whereas the median home price in Austin is $588,000.”

    Lots of people are fleeing California. Losing Tesla’s HQ has to be embarrassing for the state.

    But the real question is: How long until Texas permits its first Tesla store? That change *has* to be in the works.

    • 0 avatar
      jmo

      “Palo Alto is $3.3 million, according to Realtor.com, whereas the median home price in Austin is $588,000.””

      The Austin version of Palo Alto would be Barton Creek which has a median home price of 1.8 million.

      As for median, “According to the Austin Board of Realtors, the median home price in the Austin metro area reached $480,000 in July, up 37%”

      It’s cheaper but not by much and the gap is closing.

      • 0 avatar
        jkross22

        “It’s cheaper but not by much and the gap is closing.”

        $3.3mm vs 588k.

        That’s like saying sooner or later, a Toyota hybrid minivan will be as fast as an R8. C’mon.

        • 0 avatar
          jmo2

          If you want to compare most expensive suburb of SF you need to compare it with the most expense suburb of Austin. You can’t compare median to most expensive.

      • 0 avatar
        mcs

        You could go further North on SH-130 where the Tesla complex is located and get something cheaper. The speed limit on SH-130 is 85 MPH so you could go up around Georgetown or Round Rock. Barton Creek wouldn’t be good because Tesla is East of Austin and the commute would be terrible.

    • 0 avatar
      dal20402

      The Bay Area is still in its own special category, and California as a whole also because the state has effectively banned expanding the housing supply for the last 30 years (something that the legislature is just now taking baby steps to fix). But all other high-demand markets are equalizing at a very high level. COVID accelerated that but it was going to happen anyway. There’s not a lot of cost-of-living difference today between Austin or Boston or Seattle or Denver or Washington DC.

  • avatar
    Lou_BC

    Industry and the billionaire elite take the path of least financial resistance. We have many bashing China at every turn and complain about them eating our collective lunch but that state of affairs occurred for the same reason Elon is moving, they go where they can make more profits. The race to the bottom eventually drags everyone along for the ride.

    • 0 avatar
      jkross22

      Name one person who doesn’t take the path of least financial resistance. I know of no homeowner who doesn’t take the interest deduction for their mortgage, nor do I know anyone who doesn’t take the deduction for having kids.

      There is A LOT of legit criticism you can lodge at Musk and he’s earned all of it. This isn’t one of those. California state government is run like the mafia. I understand why he wanted out.

      • 0 avatar
        Lou_BC

        @jkross22 – true, if it’s just a move to take advantage of taxes, it’s hard to fault. Perhaps my China metaphor wasn’t the best, companies went their to avoid being responsible for worker health and safety, and environmental stewardship. That cuts into profits.

      • 0 avatar
        EBFlex

        “ Name one person who doesn’t take the path of least financial resistance.”

        Liberals. They love big government so much they often pay more taxes than they are required to. What heros

        /s

      • 0 avatar
        SoCalMikester

        i didnt take it, because taxact said to take the AMT. so?

  • avatar

    Palo Alto is a ridiculously expensive town and does not have enough space to build decent headquarters. But over the Bay Dumbarton bridge in Fremont Tesla not that long ago bought office building close to Tesla’s Fremont plant. This office is on Dumbarton Circle. That area is much cheaper than Palo Alto and there are plenty of inexpensive empty offices on Dumbarton Circle that Tesla could buy. Tesla could easily move to Fremont. I think the problem is that most of Tesla hires come outside of Bay Area or even California and cannot afford properties even in Fremont let alone Palo Alto. And do not forget post COVID spike in all kinds of crime, homelessness, drug addicts on streets and degradation of public school system which makes California not that desirable if you have family and kids. Many of my coworkers decided to move out of California for those reasons.

  • avatar
    Undead Zed

    I’m happy that my home state is getting all this new business, even if it is from billionaire supervillains. A lot of other tech companies are moving out of Silicon Valley over to Austin and Dallas cause they’re fed up with the regulations and cost of living. My only concern is they’ll bring their politics with them, which in turn will slowly turn Texas into New California.

    • 0 avatar
      sgeffe

      I would guess he’ll be at home politically in the Austin area anyway.

      I agree with you on the migrations of folks affecting politics! Scary to contemplate, particularly on the Electoral College level!

    • 0 avatar

      Undead Zed, don’t forget that they will turn Texas into blue state and all those problems they run from they will bring into Texas with them. Nowhere to run, nowhere. That’s why I stay in California, at least here there are a lot of nice wineries.

  • avatar
    pmirp1

    Great job Elon. California will be fine. Beautiful state. Great wine. Idiots in government now. Texas is where business is at. California will be fine regardless, too gorgeous to not ever care for these great businesses it is losing.

  • avatar
    EBFlex

    Nice to see Musk making a decision that actually helps Tesla. Getting out of the liberal septic tank that is California is probably the single best decision he’s made for the company. And will certainly be the most impactful.

    Maybe now the cars will actually provide a profit to the company.

  • avatar
    el scotto

    Stanford Graduates. It’ll be hard to get them to move to Texas. Management will stay in Palo Alto. At the most extreme, I could see idiot politicians bragging that good Elon is building hyper loops between the Tesla hangar, the Tesla plant, and Elon’s house. All with tax breaks. In the ultimate ace of shameless self-aggrandization, some politician will claim one of his ancestors was named Elon and was one of the 1st Texas Rangers.

    • 0 avatar
      conundrum

      How novel. A sane comment on the dystopian idiocy that is Musk and America today. The USA is now 27th in the list of countries where you can go from rags to riches, so the ones that actually make it tend to be narcissistic twits. Builds a better harder-edged plutocracy, from which dizzying heights of monopolistic privilege, the movers in charge can issue propaganda and “academic” nonsense from “think tanks” to fill the minds of people like EB Flex with the idea that free markets conquer all. For the Big Boys, the government socialist doling out of money to them and the biggest companies while the lowly taxpayers get nothing back is wonderful. Things are just fine the way they are from their jaundiced perspective. And the unimaginative armpit scratchers fed jive and who reflexively believe the guff, are their army on the ground.

      • 0 avatar
        EBFlex

        “ issue propaganda and “academic” nonsense from “think tanks” to fill the minds of people like EB Flex with the idea that free markets conquer all.”

        Awe cute. Another commentator who’s obsessed with me.

        Tell me again how moving to a state that allows the company to keep more of its money rather than handing it over to sun-human liberal politicians that will waste it on programs to encourage pronoun usage or eliminate the sale of flavored tobacco a bad thing?

    • 0 avatar
      mcs

      @elscotto: Someone from the bay area would be fine in the Austin area. I’ve lived in Austin, the Bay Area, and Boston and I’d be fine moving to Austin. Having an extra million left over from the sale of a home in a high-cost of living area, a wage increase from having no state income tax, and potentially a reduction in commute time. I don’t think they’ll have much trouble getting people to move.

  • avatar
    aja8888

    One thing about where this new plant is near Austin is that it has the ability to expand where the Fremont plant is kind of limited. Plus, I would think that this Austin facility is going to be the centerpiece for Tesla given that it will be making batteries and vehicles.

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