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What just happened? Elon Musk has been talking about moving Tesla's operations to Texas for a while, but soon, those words will turn to concrete actions. As the CEO announced at Tesla's most recent shareholder's meeting, the company's headquarters will move to Austin. The HQ will leave California and what Musk has called 'fascist' Covid-related rules behind, in favor of a region with lower taxes and lower housing prices for employees.
This is a major shift for Tesla. It has been operating out of California for years, and this move will likely be a lengthy process. Of course, Musk himself already lives in Texas, on SpaceX property – so perhaps this decision just seemed like a natural next step.
At any rate, Musk's reasons for the change are not purely political in nature. Aside from California's restrictive pandemic rules, the CEO also feels there's a "limit" to how big a company can scale in the Bay Area. High housing prices, he says, mean long and overly burdensome commutes for factory workers, who have to seek residence in other, cheaper locations.
However, this does not mean Tesla will shut down its California operations. On the contrary: its Fremont factory will remain, and it will continue to expand production there well into the future. It simply won't be the focus moving forward.
Texas Governor Greg Abbot was obviously quite pleased by the news. On Twitter yesterday, he formally welcomed Musk's decision, noting that the "Lone Star State is the land of opportunity and innovation."
While one could argue that California boasts similar accolades (being the home of the Silicon Valley), it seems whatever cost-benefit analysis Tesla's leadership team performed here weighed more heavily in favor of Texas.
Notably, Tesla isn't allowed to directly sell its vehicles to consumers in Texas due to the state's pro-dealership laws restricting such sales. However, nothing is stopping the company from making its vehicles or basing its operations there, so it remains to be
It remains to be seen what sort of impact this move will have on Tesla in the long term,