Tesla moves headquarters to Texas after Musk feud

Tensions with California boiled over last year

Tesla Inc. will move its headquarters to Austin, Texas, following through on a threat Elon Musk made last year when tensions between the billionaire and California boiled over months into the pandemic.

The chief executive announced the plan Thursday during Tesla’s annual shareholder meeting at the company’s new factory in Austin. The dearth of affordable housing and long commute times are among factors limiting how much the company can expand in the San Francisco Bay area it’s called home for 18 years, he said.

Musk didn’t bring up his clash with local health officials who temporarily blocked his efforts to reopen Tesla’s factory in the city of Fremont last year. The CEO reacted angrily to the county’s resistance in May 2020, saying the company would move its headquarters and future programs to Texas and Nevada. Tesla sued the county, defied its order and restarted production.

Critics of Musk’s handling of the crisis included a California state assembly member who tweeted his name along with an expletive. The billionaire replied hours later: “Message received.”

Musk formalized the headquarters decision in a relatively more diplomatic fashion. While Palo Alto will no longer be Tesla’s home base, he said the electric carmaker hopes to increase output in Fremont by 50 per cent. The company also recently started work on what it’s calling a “Megafactory” in the nearby city of Lathrop, where it will make Megapacks, an energy-storage product for utilities.

“We will be continuing to expand our activities in California, so this is not a matter of Tesla leaving California,” Musk said. He later added the company is “continuing to expand in California, significantly,” but will grow “even more so” in Texas.

Tesla shares closed Friday at US$785.49, down 1.02 per cent in New York. The stock is up 11 per cent this year.

Tesla was founded in 2003 and first based in San Carlos, Calif. It announced a move to Palo Alto in 2009, the year before its initial public offering. Since then, the company has grown from scrappy startup to the world’s most valuable automaker with 100,000 employees globally.

Tesla’s decision to uproot its headquarters comes despite growing discomfort among some companies with Texas’s policies, including voting restrictions and an abortion law that was just temporarily blocked by a federal judge. Governor Greg Abbott defended those measures last month by claiming the state’s “social policies” have the support of business leaders, including Musk. The CEO responded with a tweet saying he “would prefer to stay out of politics.”

Several California-based companies have left for the Lone Star State, which offers lower taxes, cheaper cost of living and fewer regulations. Hewlett Packard Enterprise Co. recently moved to Houston from Palo Alto, while Charles Schwab Corp. relocated its headquarters to the Dallas area from San Francisco.