Elon Musk, Gov. Newsom Announce Tesla’s New Engineering HQ in California

Governor Gavin Newsom and Tesla CEO Elon Musk in a joint announcement Wednesday said that Tesla would be moving their Global Engineering and AI Headquarters back to Palo Alto only 15 months after having the Headquarters officially move to Austin, Texas.

The relationship between Musk and the Golden State has been something of a roller coaster ride since the 2010s. Originally highly praised for Space X opening in the Los Angeles area and Tesla in the Bay Area, he proceeded to amaze Californians by bringing back car manufacturing to the state by reopening the Fremont Assembly Plant in 2010. Tesla proceeded to grow exponentially throughout the 2010s, aided both by the tech boom and the rising popularity of electric cars.

However, only a few years later, relations grew strained, as California tax rates and business laws began affecting the company to such a degree that Musk soon looked elsewhere. Threats of unionization and the COVID-19 pandemic shutting down his factory for months proved to be final straws for Tesla and Musk. In late 2020, Musk moved out of California to tax-friendlier Texas. Only a year later, Musk moved the Tesla HQ from Palo Alto to Austin. While many Tesla positions ultimately stayed in California, with the car plant staying and a new factory opening up in Lathrop, Tesla continued to defocus California, opening up other factories in Nevada and Texas, as well as laying off hundreds of workers in California. With the tech industry retracting in the past year due to several waves of layoffs in the Bay Area and Silicon Valley affecting tens of thousands of workers, few expected Tesla to ever consider coming back.

However, Musk’s purchase of Twitter last year hinted at something of a return for Musk back to Silicon Valley. This led to Wednesday’s announcement at the former Hewlett-Packard Headquarters in Palo Alto on Wednesday where both Musk and Newsom announced that the Tesla Global Engineering and AI Headquarters would be moving to the former HP HQ and that numerous engineering jobs would be coming along as a result.

California Engineering HQ—Remarks by Gov. Newsom/Elon Musk https://t.co/DMoY7TYK5O

— Tesla (@Tesla) February 22, 2023

“We’re excited to announce that Tesla’s global engineering headquarters will be opening right here in the former headquarters of Hewlett-Packard,” said Musk on Wednesday. “This is a poetic transition from the company that founded Silicon Valley to Tesla. We’re very excited to make this our global engineering headquarters.”

Governor Newsom was noticeably excited during the announcement, adding, “The future happens in California first. We’re changing the world through our historic investments, our conveyor belt for talent, and partnerships with companies like Tesla. The state continues to be the world’s innovation hub, charging the electric vehicle revolution, and dominating the industry in every category – all while keeping the same goal in mind: ensuring a cleaner, greener, and healthier place to live for future generations.”

He also noted that the deal would help expand California’s lead on the manufacturing and sales of electric cars in the state, adding, “California prides itself on being on the leading and cutting edge of discovery and new ideas and innovation. I’m excited to work with Tesla to both transform the automobile industry and reinforce California’s manufacturing dominance. We say about our state, the future happens here first. We are America’s coming attraction. We are able to lay claim to 44 manufacturing headquarter companies in the electric vehicle space, but none that dominate like Tesla.”

Tesla, Musk partially return to Palo Alto

While many were surprised at Musk’s abrupt turn bringing Tesla back to California to some degree, experts noted that the move didn’t come out of nowhere.

“They haven’t announced any tax breaks or things like that yet, but in the coming weeks it should be a surprise in Tesla got some sort of state or local deal that allowed them to partially move back,” explained James Kelly, a Bay Area tech advisor, to the Globe on Wednesday. “With so many companies leaving or downsizing, they probably got some sort of deal on the HP deal. But it’s also just not about money. Tesla taking over HP’s former headquarters, as Musk himself alluded to, is kind of like positioning them as the new leader in Silicon Valley.”

“The electric car market is also critical. California is leading the wave on that right now, and as a result, a lot of electric car companies, parts makers, suppliers, and periphery businesses like charging stations have opened up all over the state. Tesla doesn’t want to lose any of that. They already have a foothold in the next biggest potential market, Texas, in the US. But California right now, especially with their upcoming 2035 electric car law that basically stops the sale of new gas powered cars, is the big one.”

“Still though. Tesla just made an even larger commitment to California, and will be bringing in a lot of engineering jobs that are really needed now after all of those layoffs. It’s good timing for them. Long-term, we’ll see if Tesla continues to come back more and more into California. They seem pretty committed in Texas. This also isn’t a turnaround point for California and the tech industry. Tesla is just one company. But it’s a good sign that things may be changing and that California may start to relax some of those laws that drove out companies in the past several years.”

More on the Tesla Palo Alto move is expected in the coming weeks.