Tesla moves headquarters to Texas from Silicon Valley

• Tesla moved its headquarters from California to Texas CEO Elon Musk announced at the 2021 annual shareholder meeting

• In April 2020, on an earnings call, Musk threatened the California government to move to Texas for closing the manufacturing plant due to COVID-19

• Musk personally relocated to Austin from Los Angeles, where he had lived for two decades, in December last year

Tesla Inc’s CEO Elon Musk on Thursday said the electric vehicle maker is moving its headquarters from Palo Alto, California, which has relatively high taxes and living costs, to Austin, Texas, joining other companies like Oracle, HP, and Toyota Motor.

“I’m excited to announce that we’re moving our headquarters to Austin, Texas,” Musk told the company’s annual meeting, held in the Austin factory, which is under development.

“To be clear, we will be continuing to expand our activities in California,” Musk said. “Our intention is to increase output from Fremont [California] and Giga Nevada by 50%. If you go to our Fremont factory, it’s jammed.”

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Tesla CEO also said, “It’s tough for people to afford houses, and people have to come in from far away...There’s a limit to how big you can scale in the Bay Area.”

Regarding the Austin plant, he mentioned that it would take some time to reach the full production capacity even after it is completed as it takes Tesla less time to build a factory than to reach the high production volume.

Tesla built its Shanghai plant in 11 months but took a year to reach high-volume production.

The Big Shift

In April 2020, on a Tesla earnings call, Musk lashed out at the California government during a row over the closure of Tesla’s factory in Fremont plant due to COVID-19 and said he will move the company’s headquarters and future programs to Texas.

Billionaire Musk moved to Texas from Los Angeles, California, where he had lived for two decades, in December, and said that the relocation was to focus on the new plant and his rocket company SpaceX, which has a launch site in the southern tip of Texas.

While California levies some of the highest personal income taxes in the country, Texas has no personal income tax and is known for cheaper labor and less stringent regulation.

Although Tesla has moved its headquarters to Texas, the electric carmaker is not happy with the ban of direct sales of cars in the state.

Read More: Tesla faces questions from NHTSA after repeated incidents of crashing into emergency vehicles

In other states where the automakers have to sell their vehicles through franchised dealerships, Tesla has fought to change the rules or exploited some loopholes, for example, by setting up a Tesla store and service center on tribal lands in New Mexico.

Tesla has gathered a massive amount of support from California since it was founded in 2003 and enjoyed grant funding, tax breaks, incentives, and favorable policies from the California Air Resources Board, California Energy Commission, and California Alternative Energy and Advanced Transportation Financing Authority.

Picture Credit: Teslaoracle