Tesla to move headquarters to Texas, in latest loss for California’s tech industry

The automaker will leave its current home base in Palo Alto, Calif., for Texas’ lower-cost, more spacious pastures, he said.

“It’s tough for people to afford houses [in California], and a lot of people have to come [to work] from far away,” he said at Tesla’s newly built Gigafactory in Austin, where the company held its annual shareholder meeting. “There’s a limit to how big you can scale in the Bay Area.”

Musk looked to downplay his company’s departure from California, noting that Tesla “will be continuing to expand our activities” in the state and plans to increase production at its Fremont, Calif. factory—as well as its Gigafactory near Reno, Nev.—by 50% in the coming years. “This is not a matter of Tesla leaving California,” he said.

But the move will see Tesla follow other Silicon Valley firms like Hewlett Packard Enterprise and Oracle in departing the cradle of the American tech industry in favor of Texas’ lower taxes and business-friendly environment. Musk himself left California for Texas last year, telling the Wall Street Journal that the Golden State had become “a little complacent, a little entitled” in its status as a business destination.

Musk has sparred with California officials on a number of fronts. He notably dueled with state officials early in the pandemic over the reopening of the Fremont factory—defying orders to keep the plant closed and, in a sign of things to come, threatening to move Tesla’s headquarters out of California.

Musk didn’t say how many Tesla employees would move to Austin from California. But he did note that the company would “create an ecological paradise” at its new headquarters near the Colorado River, presumably close to where the Austin Gigafactory is located.

In addition to revealing the relocation, Musk also used the meeting to update shareholders on Tesla’s operations. He lauded the company’s record vehicle deliveries, which eclipsed 240,000 in the third quarter despite supply chain challenges—particularly chip shortages—that have hindered the automotive sector this year. Tesla’s Model Y vehicle, he added, should become the “best-selling vehicle of any kind globally” by number of units sold by 2023, so long as the company’s Gigafactories in Texas and Berlin ramp up production as scheduled.

With Tesla now operating Gigafactories in Europe, China, and North America, the company is able to build “high-volume vehicles” on the continents where most of its customers are, Musk said—bypassing logistical issues like needing to ship cars around the world.

And though Tesla’s self-driving technology is now facing scrutiny from government regulators in the wake of several high-profile accidents, Musk said the company would be “open” to licensing its autonomous vehicle technology to other car manufacturers.

“Eventually, all manufacturers will make autonomous vehicles,” he said. “I think autonomy will be such a significant life-saver and preventer of injuries that it is not a technology we want to keep to ourselves. I think it would be morally right to license it to other manufacturers, if they would like to use it.”