During the shareholders’ meeting last Thursday, CEO Elon Musk announced that the Tesla headquarters will move locations. From its current home in Palo Alto, California, Tesla headquarters to Austin, Texas.
Tesla Headquarters To Move to Austin, Texas
Musk made the announcement during the shareholder meeting at the Tesla vehicle assembly plant outside Austin. This is a new facility that is currently under construction.
The Austin facility, which is near the airport and borders the Colorado River, will soon also be the new Tesla headquarters.
However, the move to Texas doesn’t mean that the electric vehicle manufacturer will abandon the Golden State. In fact, Tesla plans to increase production in its California plant even as it moves its head office.
“To be clear we will be continuing to expand our activities in California. Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it’s jammed,” he said.
Employee Housing Is The Main Reason
In his speech, Musk said that the rising prices of houses within the Palo Alto area are making it difficult for workers to relocate. “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,” he said.
The Tesla CEO’s unhappiness with California started last year. He himself relocated his residence from Los Angeles to Austin last year. Prior to his move, Musk lived in LA for over two decades.
In April last year, Musk also took issue with California’s strict health guidelines over COVID safety. He said that state officials’ orders with regard to COVID measures are “fascist.”
Taxes Also Play A Part
The move of Tesla headquarters from California to Texas enabled Musk to shuttle between his two companies. Aside from Tesla, Musk is also CEO of aerospace company SpaceX, which has headquarters in Texas. SpaceX also has its launch site in Boca Chica, Texas. The move reduces Musk’s travel time between the two companies.
The move also greatly reduces the need for Musk to pay additional taxes. California levies some of the highest personal income taxes in the country on its wealthy citizens.
However, Texas Texas does not collect personal income taxes from individuals. Tesla’s board recently granted their CEO and executive compensation package.
This allows him to earn stock awards based on how much Musk can increase the company’s capitalization. In addition, if Musk sells his 2021-expiring options, he can earn more than $20 billion.
Tesla Latest California Company To Move
Tesla is the latest company to join the list of tech companies that moved from California to Texas. Oracle and Hewlett-Packard moved their headquarters last year. Many of the state’s perks to attract investments are working.
For example, the Texas Economic Development Act offers tax breaks to put new facilities in the state. Meanwhile, Austin is home to a sizable population of tech-educated employees.
Only one Texas law bothers Tesla at the moment. The state does not allow the direct sales of cars by manufacturers. Instead, car companies sell their products to dealerships, which then sell the cars to the public.
Tesla fought the same law in other states and used loopholes in others. For example, the company built stores and service centers on Indian tribal lands in New Mexico.
Watch the CNBC Television video reporting that CEO Elon Musk is moving Tesla headquarters to Austin, Texas:
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