Electric vehicle and energy company Tesla officially moved completely from Palo Alto to Austin, Texas on Wednesday, becoming the latest Californian company to move out of the state in the last few years.
The move to Austin had been in the works since October when the it was first announced.
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Tesla has been following the lead of companies such as Oracle and HP Enterprise by moving their headquarters out of the state, but largely leaving offices and jobs in California intact to take advantage of lower taxes and a better business climate elsewhere. While the new Tesla headquarters will be in Austin, along with Elon Musk who moved out of California last year, Tesla has remained committed to California in many other regards, such as keeping offices and a car factory in Fremont and a new factory being built in Lathrop.
However, according to a filing with the Securities and Exchange Commission (SEC) on Wednesday, the move was made official, with Tesla headquarters now being located on Harold Green Road in Austin. The filings note that out of 71,000 worldwide employees, 10,000 worked at the headquarters in Palo Alto. Tesla has not said how many will be relocating to Austin, but prior comments by Musk noting housing and commuting issues hint that it will be substantial, with some analysts looking at as much as 50%.
“It’s tough for people to afford houses, and people have to come in from far away,” Musk said in October. “There’s a limit to how big you can scale in the Bay Area. We’re taking it as far as possible, but there’s a limit how big you can scale it in the Bay Area. Just to be clear, though, we will be continuing to expand our activities in California. This is not a matter of leaving California. Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it’s jammed.”
Experts note that Texas’ favorable business climate and lower taxes have been the major pull, with housing, commuting, and other issues only being largely secondary to overall costs.
“Tesla’s move that was made official today was about money, pure and simple,” San Francisco-based tech lawyer David Singth explained to the Globe on Wednesday. “And you can’t really blame them. Taxes are high, a lot of places in the Bay Area are in high demand still, and businesses feel a lot more squeezed out here.”
“Many aren’t moving or are keeping a large presence out here. California is still California after all, and there’s a lot of people here that hate Texas itself, the heat, and other factors. Some economic too, like easier port access for products and a lot of supporting infrastructure that places like Texas and Nevada just don’t have.
“But it’s hard to compete against the Texas Economic Development Act, which is giving a ton of tax breaks to companies moving there. It will hit a head at some point, just like it did to California in recent years, where taxes will go up, but right now companies are taking advantage, and that means big companies like Tesla are going out. If anything, this is another red flag for California to start changing things for businesses here.”
Other Silicon Valley Businesses are currently considering moves outside of California.
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