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Tesla will be relocating its headquarters from California to Austin, Texas, where it will build a new factory, its chairman Elon Musk said at the company’s annual stockholders’ meeting Thursday.
The move carries out a threat Mr. Musk made more than a year ago when he was frustrated with local coronavirus lockdown orders that forced Tesla to suspend production at its Fremont, Calif. Factory, and rebuild production out there.
“There is a limit to how big you can scale in the Bay Area,” he said, adding that the high property prices there lead to long journeys for some employees. The Texas factory, which is located near Austin and will manufacture Tesla’s Cybertruck, is minutes from downtown and an airport, he said.
An outspoken early critic of the pandemic restrictions, Mr Musk called them “fascist” and predicted in March 2020 that there would be almost no new cases of viral infections by the end of April. In December, he said he moved to Texas himself to be near the new factory. His other company, SpaceX, launches rockets from the state.
The company is well on its way to selling around a million cars this year and is planning a major expansion. In addition to the Austin factory, Tesla is building one near Berlin. The headquarters have been in Palo Alto for more than a decade. The city, home of Stanford University, is across from Fremont across the bay.
Tesla is one of several California companies that say they moved to Texas in the past few months. Hewlett Packard Enterprise announced in December that it was moving to the Houston area and Charles Schwab has moved to suburbs in Dallas and Fort Worth.
Mr Musk’s decision is sure to fuel a perpetual debate between officials and executives in Texas and California about which state is a better place to do business. Texas Governor Greg Abbott and his predecessors have courted California businesses to move to the state, arguing that there will be lower taxes and lower housing and other costs. California has long cited the technological prowess of Silicon Valley and its universities as a reason for many entrepreneurs to start and build their businesses there, which include Tesla, Facebook, Google and Apple.
Texas has also become more attractive to workers in recent years, with a generally lower cost of living. Austin in particular, a thriving liberal city home to the University of Texas, has seen a boom. Many tech companies, some of which are based in California, have built huge campuses there. However, as a result, housing costs and traffic have increased significantly, causing the city to face the problems that California local governments have been grappling with for years.
Mr Musk’s announcement is also likely to take on political overtones.
Last month, Mr. Abbott called Mr. Musk to explain why a new Texas law that severely restricts abortion would not harm the state economically. “Elon keeps telling me that he likes the state of Texas welfare,” the governor told CNBC.
When asked for an answer, Mr. Musk did not confirm or deny what Mr. Abbott said. “In general, I believe the government should seldom impose its will on people while trying to maximize their cumulative happiness,” he said on Twitter. “But I’d rather stay out of politics.”
Updated
Oct. 8, 2021, 5:39 p.m. ET
On Thursday evening, a Twitter post from Governor Abbott welcomed the news and said, “The Lone Star State is the land of opportunity and innovation.”
A spokeswoman for California Governor Gavin Newsom, Erin Mellon, did not comment directly on Tesla’s move, but said in a statement that the state is “home to the greatest ideas and companies in the world” and that California will “stand up for workers,” public health and women’s right to vote. “
Mr Musk announced the company’s move after shareholders voted on a number of proposals aimed at improving Tesla’s corporate governance. According to preliminary results, investors have sided with Tesla on all but two measures it rejected: one that would force its board members to re-elect annually instead of every three years, and another that would force the company to do so would publish more details on its workforce diversification efforts.
In a report last year, Tesla announced that its U.S. leadership is 59 percent white and 83 percent male. The company’s total workforce in the United States is 79 percent men and 34 percent white.
The vote comes days after a federal jury ordered Tesla to pay $ 137 million to Owen Diaz, a former contractor who said he was repeatedly racially harassed while working at the Fremont factory in 2015 and 2016 .
The proposal for a diversity report from Calvert Research and Management, a responsible investment company owned by Morgan Stanley, requires Tesla to publish annual reports on its diversity and inclusion efforts, which is what many other big ones do Companies already do.
Investors were also re-elected to the board of Kimbal Musk, Mr. Musk’s brother, and James Murdoch, the former manager of 21st Century Fox, despite a recommendation from ISS, a firm that advises investors on shareholder votes and corporate governance, to vote against them .
Proposals calling for additional reporting on both Tesla’s practice of using mandatory arbitration to settle labor disputes and the impact of the procurement of materials on human rights failed, according to initial results. A final balance will be announced in the coming days, the company announced.
Ivan Penn contributed to the coverage.
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