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Tesla Inc.
TSLA 1.39%
Relocates its headquarters to Austin, Texas, cementing Chief Executive Elon Musk’s commitment to the Lone Star State and expanding a handful of Silicon Valley companies that have relocated there.
Mr Musk announced the move of Tesla’s Austin area factory, which the company began construction last year, and where it held its annual shareholders meeting on Thursday. He added that Tesla plans to expand its operations in California, but the company’s ability to expand in the San Francisco Bay Area is limited.
“If you go to our Fremont factory, it’ll be clogged,” he said. “We’re like canned spam.”
Mr Musk said last year that he moved to Texas where his rocket company, Space Exploration Technologies Corp. or SpaceX, maintains important operations. He previously compared California to a sports team that had become complacent after a winning streak. Tesla is following in the footsteps of companies like Hewlett Packard Enterprise Co.
– a descendant of what Bill Hewlett and Dave Packard started in a garage in Palo Alto, California – and Oracle Corp.
who relocated their headquarters to Texas at the beginning of the Covid-19 pandemic.
Tech companies were among the first to send employees home at the start of the pandemic, and a number of prominent industry players have allowed their employees to work remotely on a permanent basis. This shift has led many Silicon Valley employees and startup CEOs to move to other parts of the country for cheaper housing, less traffic, and a better quality of life.
During the WSJ’s CEO Council, Tesla boss Elon Musk criticized California as a matter of course for innovators. Photo: Hannibal Hanschke / Reuters
Mr Musk nodded to some of these challenges and said of the Bay Area, “It is hard for people to afford houses and a lot of people have to come from far away.”
Texas, especially its capital Austin, has attracted more tech companies and startup developments in recent years, and offers lower taxes and less regulation than California and more affordable real estate.
Texas lawmakers have been clamoring for coastal immigration and financial incentives. Governor Greg Abbott, a Republican, said in a television interview last month that he had spoken to Mr Musk and that the Tesla chief was drawn to the state’s right-wing social policies. Mr Musk responded by saying he preferred to stay out of politics.
Governor Abbott welcomed Tesla in a tweet on Thursday.
Austin is not without complications, for Mr. Musk and others. In February, parts of the state – including Austin – lost power in a random storm, which Mr Musk saw firsthand. “I was in a house with no lights, no electricity, no heating, no internet – I couldn’t even get to a grocery store during that Austin blizzard,” he said.
Another problem: State law prohibits auto companies from selling vehicles directly to consumers, as does Tesla’s business model.
Despite relocating their headquarters out of California, companies like HPE have maintained a strategic hub in the Bay Area, which remains the country’s premier technology hub. Mr Musk said Thursday that Tesla will maintain a significant presence in California and increase production from its Fremont, California factory.
Representatives of California Governor Gavin Newsom, a Democrat, did not immediately respond to a request for comment.
While Tesla overcame tight global supply chains to ship a record number of vehicles in the third quarter, Mr Musk pointed out that parts shortages have limited the company’s ability to deliver new, long-promised models.
“This year has just been a constant battle with parts supplies,” he said.
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Tesla is likely to begin production of its Cybertruck pickup late next year, with production coming in larger quantities in 2023, Musk said. In January he was optimistic that the company could deliver some of the pickup trucks to customers by the end of 2021.
He hopes the company will produce its long-delayed tractor-trailer and a revised version of its Roadster sports car in 2023.
“We should overcome our major supply chain bottlenecks in ’23,” he said.
Also on Thursday, a preliminary vote indicated that Tesla directors James Murdoch and Mr. Musk’s brother Kimbal Musk would be re-elected to the company’s board of directors, said investor relations chief Martin Viecha.
Institutional Shareholder Services proxy advisory firm had asked investors to vote against reelection on concerns, including executive and director compensation. The directors have been on the board since 2017 and 2004 respectively. The Murdoch family are major shareholders in News Corp, the parent company of the Wall Street Journal.
Early balance sheets indicated that shareholders had signed a non-binding proposal to cut the board’s tenure from three to one year and a call for additional information to be released on Tesla’s efforts to promote diversity and inclusion.
The company said in a report late last year that 60% of its U.S. workforce was made up of people from underrepresented communities, while women made up 21%.
Write to Rebecca Elliott at rebecca.elliott@wsj.com and Rob Copeland at rob.copeland@wsj.com
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