Elon Musk says that Tesla will move its headquarters from Palo Alto, California to... Austin, Texas. A city in a state where it’s illegal to sell cars directly to consumers, and where the freedom of women is increasingly threatened thanks to draconian abortion laws. But, you know, the state income tax is zero... so there’s that.
This announcement isn’t terribly surprising, since Musk said early in the pandemic that Tesla would leave California after he grew frustrated with COVID-19 health restrictions that made it hard to restart production after regulators temporarily shut down Tesla’s operations there. Shortly thereafter, the company announced plans to open a factory in Austin where it will produce the Model Y and Cybertruck.
Tesla is Californian — But back then, Musk stopped short of saying Tesla would move its headquarters to Texas, so this move is an escalation. Tesla is a Californian company through and through. You often see figures like Musk and podcaster Joe Rogan say they’re going to leave the state, but neither of them would have succeeded if it weren’t for all that California provided to them — like access to talent, tax credits, and an electric-car buying population for Tesla, or a comedy scene in the case of Rogan. Only once they’ve made it and see a tax hit do they decide to abandon ship, even though taxes paid for so much — tax credits, schools, etc — that helped them.
That said, Tesla’s move is probably at least somewhat symbolic. Many employees in California will likely be hesitant to upend their lives and move to Texas, and Tesla itself says it plans to grow vehicle production in California by 50 percent. Musk believes that it will be easier for employees to afford homes in Texas, though, and that Tesla will be more competitive for talent in the state. He made the announcement during Tesla’s 2021 shareholder meeting this week.
Goodbye, and good luck — Texas has become so popular of late that any supposed supply of “cheap housing” is quickly evaporating, especially in the tech hub of Austin. According to real estate site Redfin, housing prices in Austin have risen 39 percent since last year to a median price of $485,000. Tesla’s move will most likely exacerbate that. Also, anyone who’s been to Austin knows it’s incredibly humid during the summer. And you have a state legislature passing archaic bills that not only limit access to abortions, but encourage people to rat out clinics or physicians who perform them.
Curiously, as we mentioned above, Tesla cannot sell cars directly to consumers in Texas, meaning any vehicles made at its Austin factory will, perversely, likely need to be shipped out of state before they can be sold to residents there. That’s likely fine for the company, though, which has been raising the prices of its cars amid record demand and industrywide shortages. Its profit margins have accordingly been moving upward.