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One of the biggest economic announcements in Austin’s history came with little fanfare and almost no warning.
In a conversation with shareholders on Thursday, Tesla CEO Elon Musk mentioned almost casually that the electric car maker – one of the most famous and valuable companies in the world – has decided to move its headquarters from California to Austin.
The breathtaking move – which came by surprise to many local and state officials – continues Austin’s rise as a technology hub and adds to Tesla’s rapidly growing presence in the region as the company operates a $ 1.1 billion manufacturing facility in southeast Travis County builds.
“I’m excited to announce that we are moving our headquarters to Austin, Texas,” said Musk. “We’re going to create an ecological paradise here around the Colorado River.”
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Musk had previously threatened to relocate the company’s headquarters from Palo Alto, California to Texas or Nevada in 2020 after disagreements with California lawmakers. Musk made no mention of this argument during Thursday’s meeting.
Dan Ives, an analyst at Wedbush Securities, said Tesla’s decision is a huge win for Austin and makes sense for the company.
“This is an important strategic move for Tesla that makes a lot of sense,” said Ives. “The tea leaves were there for Tesla to take this step, and it’s a big feather in the cap for Austin.”
Musk and Tesla left a number of questions unanswered. The announcement didn’t make a schedule for the move, how many employees might come to central Texas or how many jobs might be created. The company also didn’t say where its headquarters would be, although Musk appeared to indicate it could be on the 2,100-acre property at 130 Texas and Harold Green Road in Travis County, where the company is continuing construction of its newest manufacturing facility Furnishings.
Travis County Commissioner Jeff Travillion, whose district includes Tesla’s factory, said Tesla did not tell district officials how many corporate jobs are likely to come with the decision, or whether the headquarters will be at the new factory’s location or elsewhere in town .
Musk announced in July 2020 that Austin would be the choice for the factory where the company will produce its Cybertruck, Semi, Model 3 corporate sedan, Model Y and batteries. Musk said Thursday that the Austin plant could potentially produce Tesla ATVs as well.
Musk said Thursday that Tesla is making great strides in the Austin area factory it has named Giga Texas. The first vehicles are slated to hit the market later this year, and the facility could add more than 10,000 new jobs to central Texas by 2022.
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Local government agencies approved tax breaks in the millions last year to lure the Tesla factory to central Texas. The Del Valle Schools Board approved a tax break that could be approximately $ 46.4 million over 10 years, and Travis County commissioners approved an incentive package worth at least $ 14 million over 10 years.
Tesla’s announcement comes less than a year after software giant Oracle announced in December that it would move its headquarters from California to Austin. A number of other technology giants – including Apple, Facebook, Google, and Amazon – have recently expanded their operations in central Texas, expanding the technology sector that has long been anchored by Round Rock-based Dell Technologies. Samsung has also announced that it is considering two locations in central Texas – one near its current operations in Austin and one in Williamson County, near Taylor – for a $ 17 billion chip manufacturing facility.
“I think Tesla’s decision to move its headquarters here is a very strong endorsement for Austin, Texas and the talented people we have here in the Central Texas area,” said Gary Farmer, chairman of Opportunity Austin, the Greater Austin Chamber of Commerce’s regional business development initiative.
Amber Gunst, CEO of Austin Technology Council, said that while the timing of the announcement came as a surprise, she was not shocked that Austin was selected as Tesla’s new headquarters.
“Austin has just proven time and time again that we have a stable economy, that we have state and local government that is willing to work with companies to provide opportunities and jobs for the region,” said Gunst Message not only to the Silicon Valley and California, but to the whole country, that … it has a lot to offer here and if cities and states do not make it transparent to companies and make it aware that they are valued and that they are wanted there, then companies will find another Contact point. “
Matt Patton, an economist at Angelou Economics based in Austin, said Musk’s announcement didn’t come out of the blue, given his positive comments on Texas compared to California last year and the other steps he’s taken to address it to set up numerous businesses here.
“But whether it’s a surprise or not, it’s still a big deal,” Patton said. “Austin is sure to attract a lot of attention,” as Tesla’s official new base of operations.
He said the home of Tesla headquarters is likely to lead to increased investment in Austin, both by Tesla and by other companies and entrepreneurs hoping to tap into Musk’s sizable “sphere of influence” – which is exceptionally high for a company Profile is executive and can influence Wall Street stock prices with a simple tweet.
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“How many years have we viewed Austin as this cutting edge technology hub? And now it’s getting stronger, ”said Patton. “Coupled with some other moves we’ve had, both to Austin and to Texas in general, (Tesla’s announcement) is just one of the things that the momentum seems to be building on itself.”
Travillion, the Travis County commissioner, said the move is a clear sign that Tesla and Musk are pleased with the progress of their expansion plans in the area.
“Ultimately, this shows primarily that Austin has a really good business environment and that we have all the foundations in place” to build a local workforce that employers want, he said.
Ed Latson, executive director of the Austin Regional Manufacturers Association, called the headquarters’ announcement “great news” and said the decision “really shows Tesla’s commitment to central Texas.”
“The appointment as Headquarters will help Austin attract more talent and suppliers, and increase their impact in the region. It also confirms that we will be at the center of EV innovation for decades, ”Latson said
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Jon Hockenyos, president of Austin-based economic analysis firm TXP Inc., said winning a corporate office is generally viewed as “the pinnacle of recruiting for economic development.”
This is because the location of a headquarters “is viewed as the place where a company is most likely to expand and least likely to leave,” he said, adding added security to communities.
In a statement, Austin Mayor Steve Adler said “We welcome Tesla home” and called the automaker “a technology company that is creating the clean, midsize jobs Austin needs”.
Musk said that while Tesla is moving its headquarters to Austin, the company will expand in California, but he said there is a limit to scale in the San Francisco Bay Area.
“To be clear, we will continue to expand our operations in California,” said Musk. “Our intention is to increase the production of Fremont and Giga Nevada by 50%. If you go to our factory in Fremont, it’s clogged. “
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However, he said that in California, “it’s hard for people to afford houses and people have to come from far,” Musk said.
Musk previously said the facility in the Austin area has become one of his biggest focuses. When Musk confirmed he’d moved to Texas in December, Musk said the move was closer to the Giga Texas factory and SpaceX’s spaceship development in South Texas.
Musk said on social media in June that he has a home near the SpaceX facility in South Texas. He hasn’t publicly stated that he is a resident of Austin, but he said Thursday that he was in town during the February lockdown and lived in a house with no electricity, heating or internet access.
Other Musk-run companies have expanded into Austin over the course of the pandemic. These include Musk’s tunneling company, Boring Co., which started operating last year and acquired land in Bastrop County; Neuralink, Musk’s neurotechnology company that posted job postings for Austin in the past few months; and Musk’s private foundation, the Musk Foundation, which moved to Austin in the summer of 2020.
SpaceX, which has a presence in South Texas with offices near Boca Chica, could also expand into Austin as it has posted vacancies in the area, though it’s unclear what the company’s plans might look like.
Musk also said Thursday that the company had planned to start selling Tesla Insurance in Texas next week.
The American government employees Lori Hawkins, Bob Sechler and Philip Jankowski contributed to this report.
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