Analysis: Tesla speeds the EV industry’s South by Southwest drive

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AUSTIN, Oct 8 (Businesshala) – Tesla Inc (TSLA.O)’s decision to move its headquarters from Palo Alto, Calif. to Austin, Texas, shifts jobs in the electric vehicle industry to southern and western US states that offer lower taxes, lighter regulation and less federalization than the Coastal Blue states where most electric vehicles are sold.

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Electric vehicle startups and established automakers have invested $24 billion in new factories in Texas, Arizona, Oklahoma, Tennessee and Kentucky.

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1 EV maker’s annual meeting on Thursday puts an exclamation point on the shift in the US auto industry’s center of gravity — and it also highlights the tensions it can create.

Competition between states for electric vehicle jobs is intense, and has a political dimension. Democratic-leaning blue states such as California are home to many electric vehicle buyers and EV company investors who have strong views on climate policy.

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Many of the states seeking EV jobs are politically conservative Red States, whose Republican governors are supportive of the fossil fuel industry and eager to welcome electric vehicle makers and their jobs with subsidies and regulatory streamlining.

“The Lone Star State is a land of opportunity and innovation. Welcome,” Texas Governor Greg Abbott tweeted Thursday after Tesla’s move was announced.

Tesla, the world’s most valuable automaker, now faces the challenge of taking advantage of the Texas business environment without alienating recruited workers from the San Francisco Bay Area’s vibrant technology industry. It also has to consider the larger base of Tesla vehicle customers in more politically liberal states like California and New York.

“Tesla doesn’t want to isolate that large and influential market. They don’t want to invite criticism or attacks from public advocacy groups that accuse them of seeking a bigger stimulus package or leaving California at a time like this.” When the state is in trouble.” said John Boyd, principal of site selection firm Boyd Company.

Detroit automakers such as Ford Motor Company have a similar problem. Ford said last week that it and South Korean battery partner SK Innovation would invest $11 billion in Tennessee to develop a massive electric vehicle and battery assembly complex larger than the automaker’s historic Rouge complex in Dearborn, Michigan.

That complex and related new operation in Kentucky could create 11,000 jobs.

The United Auto Workers union immediately called on Ford to reassure them that they would be union jobs. But in Tennessee and Kentucky, union membership is optional, and workers at other auto manufacturers in those states have so far rejected efforts to organize a UAW.

Musk had a public discord with California after regulators forced Tesla to suspend production in 2020 during the early months of the COVID-19 pandemic. At one point, Musk threatened to move Tesla’s headquarters and future programs out of state.

Musk, one of the world’s richest men, said he moved to Texas last year, and has moved into his new home wearing a Western-style bandana and shirt. Income tax rates in California range up to 13.3%, while Texas has no tax on personal income.

California, however, accounted for about 15% of Tesla’s global deliveries in 2020.

On Thursday, Musk said the headquarter move is not a case for Tesla leaving California entirely, and added that production from Tesla’s Fremont assembly plant and Reno, Nevada, battery factory would increase by 50%. One source said staff engineers at Tesla’s Palo Alto area offices expect engineers to stay in Silicon Valley, though some finance workers may relocate.

An odd issue for Texas officials and Tesla is that Texas law currently prohibits Tesla from selling vehicles directly to customers in the state.

Austin is the fastest-growing US metropolitan area, with its population growing by 30% between 2010 and 2020 to nearly 2.3 million.

Like other large Texas cities, Austin and its surrounding Travis County, where the Tesla factory is located, are governed by Democrats, separating it from the majority of Texas’ conservative red, less-densely populated counties.

The Austin metro area is a technology hub, home to PC maker Dell Technologies Inc. (DELL.N), and home to large Silicon Valley companies such as Apple Inc. (AAPL.O) and Alphabet Inc.’s Google (GOOGL.O). . Business software maker Oracle Corp (ORCL.N) announced in December that it was moving its headquarters to Austin.

South Korean conglomerate Samsung Electronics (005930.KS) is also close to begin construction of a $17 billion semiconductor factory north of Austin.

Austin’s Democratic Mayor Steve Adler welcomed the decision, saying Tesla was “manufacturing the clean, medium-skill jobs Austin needs.”

Known for its quirky culture, Austin is also home to large music festivals, such as Austin City Limits and South by Southwest, drawing large crowds each year.

But the massive growth and the influx of many well-paid Californians has faced resistance by some local residents, with out-of-state buyers buying homes for cash at double the price, frustrating many Austinians. .

Reporting by Tina Belone, Hyunju Jin and Paul Lienert; Written by Joseph White; Editing by Dan Grebler

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