Musk Is Moving Tesla’s Headquarters From California To Texas

Tesla, born in Silicon Valley in the early 2000s, is moving its headquarters to Texas where the electric-car maker’s billionaire CEO Elon Musk already lives, though it will continue building vehicles in the San Francisco Bay Area. 

Musk made the announcement Thursday evening at the company’s annual shareholders meeting, held at Tesla’s nearly complete Texas Gigafactory near Austin. He didn’t specify the precise timing of when the current headquarters in Palo Alto would close, though the move is not entirely unexpected. 

“To be clear though, we will be continuing to expand our activities in California,” Musk said. “This is not a matter of Tesla leaving California. Our intention is to actually increase output from Fremont and from a gig in Nevada by 50%.”

Though California remains Tesla’s biggest market in the U.S. and largest source of vehicle production, Musk has soured on the state in recent years, most notably after health officials in Alameda County, where the company’s Fremont factory is located, set restrictions to protect worker safety and health during the early days of the Covid-19 pandemic in 2020. Musk, whose views have grown more libertarian over the years, moved to Austin in 2020.

California Governor Gavin Newsom, a Tesla owner, had told CNBC in May 2020 interview that he wasn’t “concerned about Elon leaving anytime soon” after Musk initially threatened to do so.

Yet Musk has increasingly bristled at strict rules in California while warming to the appeal of cheaper, less-regulated Texas. In September, after the state passed a strict abortion law, and following its tighter rules on voting and loosening of gun regulations, Texas Gov. Greg Abbott said the billionaire entrepreneur “likes the social policies” there.

“California is the birthplace of innovation, the 5th 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.

“We stand up for our workers, public health, and a woman’s right to choose. These are California’s fundamental values, and we’ll continue creating more jobs than any other state, outpacing the nation’s economic recovery, and maintaining the lowest COVID-19 case rates in the country,” she said.

Tesla’s headquarters move is the first by an automaker in the state since Toyota similarly announced plans to move its North American headquarters from suburban Los Angeles to suburban Dallas. Electric vehicle startups Lucid Motors, Fisker Inc. and Rivian currently are based in California.

“We believe this was a smart strategic move for Tesla as the company is aggressively building out its Austin footprint and over time with Cybertruck and more Model 3/Y production Musk is now doubling down on its Texas footprint with capacity ramping into 2022,” Daniel Ives, an equity analyst for Wedbush Securities, said in a research note. “While Fremont will continue to be a key for Tesla around Model 3 production, we believe this was the first step towards Tesla making Austin its domestic and global foundational location over the coming decade with its recent frustration with California officials likely accelerating this move.”

Among the issues Musk cited were the company’s need for additional space, expensive home prices in the Bay Area and long commutes for workers. 

“We’re here in Austin and our factory is like five minutes from the airport, 15 minutes from downtown,” Musk said. “We’re going to create an ecological paradise here on the Colorado River. It’s gonna be great.”  

Tesla shares rose 1.4% in Nasdaq trading on Thursday to $793.61.