High home prices and limited ability to expand are why Tesla founder Elon Musk says he has decided to move the company’s headquarters from California to Texas.
Musk announced the planned move on Oct. 7 during Tesla’s annual stockholder meeting held at its Gigafactory in Austin, Tex. The company will move its headquarters from Palo Alto, Calif., to Austin.
“We’re limited on how big we can scale in the Bay area,” Musk said about the decision to move. “It’s tough for people to afford houses, and a lot of people have to come in from far away.”
According to Realtor.com, the median price for homes in Palo Alto is $3.3 million compared to $588,000 in Austin.
The new Austin headquarters will be five minutes from the airport and 15 minutes from downtown, Musk said.
“We are going to create an ecological paradise because we’re right on the Colorado River. It’s going to be great,” he said.
Tesla plant will remain in California.
Tesla isn't abandoning California altogether. The company plans to expand its Fremont facility and the Gigafactory in Nevada. The company will increase production at both facilities by 50 percent, Musk said.
“We’re spam in the can here,” he said about the Fremont location.
The Fremont location was formerly a General Motors plant that Tesla purchased in 2010. The electric vehicle manufacturer’s first Model S rolled off the line there in June 2012. Currently, Tesla’s Model S, Model X, Model 3, and Model Y vehicles are built in Fremont.
Last year, Musk reportedly threatened to close the Fremont factory after getting in a tiff with California state regulators. Tesla is one of the last automakers still manufacturing cars in California, he told CNBC.
Musk calls Texas home.
The Austin headquarters will be closer to Musk’s personal residence. Last year, the billionaire moved to the Lone Star State from California. Two of his other companies, SpaceX and the Boring Company, have operations in Texas.
Many companies have moved from California to Texas.
Tesla isn’t the only company to move from California. According to the California Policy Center, over 100 large and small companies, celebrities, and entrepreneurs have left or plan to leave the state since 2014. The main reasons for the exodus are the state’s high tax burden and cost of living.
The California Book of Exoduses, published by the California Policy Center, shows that over half of the companies that left the Golden State are choosing to resettle in Texas. Lower taxes, lower housing costs, and fewer regulations are some of the reasons companies like Oracle, Hewlett Packard, and Charles Schwab decided to relocate to Texas.
Austin, in particular, is a hot spot. According to The Austin Business Journal, in 2020, the city had a record-breaking number of new jobs brought by corporate relocations.
“WELCOME TO TEXAS!! Yet another HQ has #GoneToTexas and we could not be more excited!! Companies like @Tesla continue to choose Texas for their future growth and opportunity! #GoBigInTexas @TexasEconDev,” tweeted Adriana Cruz, executive director of Economic Development and Tourism for Texas Gov. Greg Abbott’s office.