Tesla CEO Elon Musk said this week that the automaker would relocate its headquarters from Palo Alto, California, to Austin, Texas, following up on a string of promises stretching back years. The EV automaker’s CEO made the announcement during the company’s annual shareholder meeting, which itself took place from the offices of the company’s latest plant in Austin, scheduled to begin Model Y production later this month.
The move itself was not entirely unexpected given Musk’s history of comments toward some California officials, and was something that had been expected for some time—despite the fact that some comments by the CEO aimed at California were written off as short-term fuming regarding regulations in the densely-populated Bay Area.
“I’m excited to announce that we’re moving our headquarters to Austin, Texas,” Musk said during the shareholder meeting, making the news official.
Tesla’s move to Texas follows Toyota’s relatively recent move from the Golden State to the Lone Star State, which raised some controversy of its own at the time as well, and it’s difficult to deny that Austin has become a tech hub in recent years. Texas also has no income tax, as has been pointed out when news of Tesla’s planned move first started appearing, and offers much more potential for expansion than is available in the Bay Area, in addition to much more permissive regulatory regimes.
The timing of the announcement almost coincides with the start of Model Y production at the Austin plant, which has been running a bit behind schedule, and which is also expected to start production of the Cybertruck about a year from now. Tesla has prioritized Model Y production at the Austin plant, as the Model 3 and the Model Y have collectively accounted for about 95% of Tesla deliveries in the third quarter of this year.
The move would not mean, however, that Tesla would relocate its Fremont plant and other facilities to Texas, as the automaker plans to keep its California plant, and will in fact boost its output in the near future.
“To be clear we will be continuing to expand our activities in California,” Musk added during the meeting. “Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory, it’s jammed.”
California officials drew the Tesla CEO’s ire over COVID-related work restrictions in April of last year, about a month after pandemic-related quarantines shuttered many auto plants, prompting some strong words aimed at Alameda County officials at the time.
Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant “Interim Health Officer” of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!
Still, even at the time a number of industry analysts noted that the threat to move out of California was based on other, longer-term issues rather than a momentary dislike of public health-related policies. Industry analysts have cited a string of air quality violations by Tesla in Fremont over the years, while noting the existence of a more lax regulatory environment in Texas.
“California has provided countless financial incentives to support Tesla through its most difficult years, through the CA ZEV program, the CAEATFA [California Alternative Energy and Advanced Transportation Financing Authority] program, and more,” Ed Niedermeyer, autonomous industry analyst and author told Autoweek.
“Even BAAQMD [Bay Area Air Quality Management District] has gone easy on Tesla’s rampant environmental violations at Fremont,” Niedermeyer added. “If California’s public servants have been so willing to compromise on their public duty to equal enforcement of the rules (while handing out hundreds of millions of dollars), and yet it’s still not been enough to keep Tesla’s HQ in-state… well, I don’t know how Texas can assume Tesla won’t just suck them dry and move on as well.”
With the upcoming launch of two new plants this year, one in Texas and one just outside of Berlin, the automaker appears poised to enter a new stage with a heavier focus on its best-selling models, if the latest delivery results are any indication. The next big launch after the start of Model Y production in Austin is expected to be the start of Cybertruck production in late 2022.
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