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Elon Musk seemed oddly casual to drop the biggest news from Tesla’s virtual shareholders’ meeting on Thursday afternoon. From inside the so-called Gigafactory that the company is building in southeast Travis County, on a raised pedestal in front of a red and white painted production line, the billionaire announced that Tesla is moving its headquarters from Palo Alto, California, to the area of Austin. Musk – a new Texan himself – did not provide a satisfactory explanation for this.
He talked about how Tesla had outgrown its California factory, but that was a reason to build a new factory instead of relocating corporate headquarters. He found that employees there find it difficult to afford an apartment and that they have to travel long distances to work. (Of course, Austin barely offers the cheap living it once offered.) Musk also said that there is a “limit to how big you can scale in the Bay Area.” He expects Tesla to keep growing, and he seems to believe that growing in Texas will prove to be easier.
Musk, who wore a black T-shirt and a headscarf around his neck, praised the new Austin facility. He wondered why the sprawling facility that will produce electric vehicles, including the Cybertruck, is so convenient to the airport (five minutes) and downtown (fifteen minutes). He promised to “create an ecological paradise” along the Colorado River, which runs next to the Gigafactory property. But fifteen minutes from the factory downtown is a little upbeat, even in ridiculous mode, and this section of Colorado isn’t exactly a prenatal miracle, though it’s nice enough if you don’t mind the occasional pipeline in Dirt is buried.
There are other possible reasons for the move. For one, automakers like Texas for sure. Toyota moved its North American headquarters from Los Angeles to Plano in 2017. The Japanese company is also expanding its operations in San Antonio, with Navistar expected to begin manufacturing commercial vehicles there next year. Meanwhile, electric truck maker Rivian is slated to have talks about building a large factory outside of Fort Worth.
It’s also true that California businesses are flocking to Texas. The low state taxes, the relatively affordable housing, the climate for unauthorized reforms, and the ease of building all contributed to this draw. Between January 2018 and June 2021, several dozen corporate headquarters moved from the Golden State to the Lone Star State, spanning the alphabet from software company Aatonomy to Zoho. Other notable additions include Silicon Valley heavyweight Oracle and Pabst Brewing. Musk has telegraphed Tesla’s exit from California for more than a year. He was known to clash with Alameda County, California officials in 2020 over the reopening of the company’s Bay Area factory amid the coronavirus epidemic. He threatened to move his headquarters to Texas or Nevada in a tweet in May 2020 and began public courtship by Texas officials.
Let’s not ignore the fact that Musk seems to really like Austin and Texas after announcing his own move late last year. (He has said that he lived mostly in a tiny house near the Boca Chica test site of his aerospace company, SpaceX.) Also, as some on my Twitter feed noticed, he has a long-term relationship with Grimes right now quit and apparently moved for Austin after a big breakup is kind of a cliché.
But there are probably more important reasons for choosing Tesla. Most people consider it a car company, and the vast majority of its sales (85 percent) come from making electric vehicles. But Musk has long since stated that Tesla is not just an automaker. “Tesla’s mission has always been linked to sustainability,” the company wrote five years ago when it announced the takeover of the solar energy company SolarCity.
“I think Tesla Energy will be about the same size as Tesla Automotive over the long term,” Musk said last year. He is moving an electric car company to a state that suffered a massive power outage eight months ago. In his opinion, this failure was not a deterrent. It was an opportunity. Musk spoke at length this week about using Tesla batteries to stabilize grids and create a “sustainable energy future.” Texas Monthly reported in August that Tesla had filed papers to begin selling power in Texas. And work on Tesla’s first large battery in Texas outside of Houston continues. What greater challenge than becoming an energy company that rethinks energy? If Tesla leads there, why not move to Texas? The state still lives and breathes the energy business.
Tesla’s ambitions continue to grow. A few minutes before announcing the headquarters move, Musk became philosophical about “the fundamental good of Tesla.” In his opinion, that doesn’t mean building the first mass-market electric vehicle or getting involved in the global automaker club. It reads: “How many years have we accelerated sustainable energy? This, in my opinion, is the basic way of looking at Tesla’s worth. So if we can accelerate sustainable energy by another five years, that’s good. Hence the need to grow quickly. ”
That’s the musk mentality. Tesla is a force for good in the world, so it has to grow quickly. So what better place to grow fast than growth-friendly, business-friendly Texas? If Musk sees Tesla as a new breed of energy company, or at least a company heralding a new energy era, then it makes sense to be in Texas. Legendary oilman HL Hunt came to Texas to make his fortune, as did Lee Raymond (a South Dakotan) who made his mark on Exxon. If Musk also wants to imprint his image on the energy industry before heading to Mars, it makes sense to do so from Texas.
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