- In April 2020, on Tesla’s earnings call, Musk rebuked California government officials for calling their temporary COVID-related health orders “fascist.”
- In 2020, Musk personally relocated from Los Angeles to the Austin area where he had lived for two decades.
Tesla is moving its headquarters from Palo Alto, California to Austin, Texas, CEO Elon Musk announced Thursday at the company’s shareholder meeting.
The meeting took place at a property at Tesla’s vehicle assembly plant under construction outside Austin, which borders the Colorado River near the city’s airport.
However, the company plans to ramp up production at its California plant, regardless of the move to the headquarters.
“To be clear, we will continue to expand our activities in California,” Musk said. “Our intention is to increase production by 50% from Fremont and Giga Nevada. If you go to our Fremont factory it jams.”
But, he adds, “It’s hard for people to buy a house, and people have to come from far away… There’s a limit to how big you can make in the Bay Area.”
Regarding the ongoing plant in Austin, he said it will take some time to reach full production even after its completion.
“It takes longer to build a factory in Tesla-Land than to get a higher volume of production once the factory is built,” Musk said. For example, Tesla’s Shanghai plant was built in 11 months, but took a year to reach high volume production. He hopes Tesla’s new plant near Austin will follow Shanghai’s example.
Musk’s growing dissatisfaction with California has been evident for some time now. In April 2020, on Tesla’s earnings call, Musk rebuked California government officials for calling their temporary COVID-related health orders “fascist.”
Later, Musk personally relocated from Los Angeles to the Austin area, where he lived for two decades.
Doing so enabled Musk, who is also CEO of aerospace company SpaceX, to reduce his personal tax burden and be closer to the SpaceX launch site in Boca Chica, Texas.
Tesla’s board gave Musk an executive compensation package that could earn him massive stock rewards based on an increase in the automaker’s market cap and some other financial goals. According to InsiderScore, if he sells the options expiring in 2021, he could generate more than $20 billion in income this year.
California imposes some of the highest personal income taxes in the country on its wealthy residents, but Texas has no personal income tax.
Tesla isn’t the first company to move its headquarters from California to Texas. For example, Oracle and Hewlett Packard are among the tech giants that decided to take this step last year.
Texas is actively recruiting companies through its Texas Economic Development Act to offer tax breaks for setting up new facilities in the state. Austin, with a top technical university and cultural events like South by Southwest, is an attraction for tech employers.
Business attorney Domenique Romano, managing partner at Romano Law in New York City, explained that taking such a step isn’t particularly cumbersome. A Delaware business that has operated as a “foreign” corporation with headquarters in California, like Tesla, can move its domicile by setting up a facility in a new state, and hiring there. and relocating key employees.
They will not have to cease operations in other states, although they usually return them.
“From a legal standpoint, Texas has less of a regulatory burden,” Romano said. “It’s a more business- and employer-eligible state in many ways. You have to jump through far fewer hoops in Texas or Florida than an employer in California in terms of reporting requirements and more.”
Texas Gov. Greg Abbott said the Tesla CEO also supported his state’s “social policies.” However, Elon Musk declined to weigh in on Texas’ restrictive new abortion law after Abbott claimed it.
Musk wrote on Twitter at the time, “In general, I believe that the government should rarely impose its will on the people, and while doing so, aspires to maximize their cumulative happiness. ” “That said, I would prefer to stay out of politics,” Musk said.
Tesla has generally garnered an overwhelming amount of support from the state of California since it was founded in 2003. It has enjoyed grant funding, tax breaks, incentives, and favorable policies from the likes of the California Air Resources Board, the California Energy Commission and. California Alternative Energy and Advanced Transportation Financing Authority, among others.