Elon Musk says Tesla will move its headquarters to Texas

California operations will continue to expand despite Musk's contentious relations with the state

Tesla CEO Elon Musk speaks before unveiling the Model Y at the company's design studio in Hawthorne, California in March, 2019. AP Photo

Tesla will move its corporate headquarters to Austin, Texas, where a brand new factory for the Model Y and coming Cybertruck is nearing completion.

Chief executive Elon Musk announced the move on Thursday during the electric-vehicle maker’s shareholder meeting from the Austin plant.

Tesla has been based in Palo Alto, California, the leafy Silicon Valley suburb that is home to Stanford University and several venture capital firms, since its founding in 2003.

But the company has grown from scrappy start-up to the world’s most valuable car maker and Texas, centrally located between the two coasts, has become its centre of gravity in the US.

Mr Musk said Tesla was not abandoning California, saying the electric-car maker will continue to expand its manufacturing in the state.

It aims to boost production at its vehicle factory in Fremont, and at its Nevada battery plant, by 50 per cent.

“We will continue to expand our activities in California. This is not a matter of Tesla leaving California,” Mr Musk said.

Californian Governor Gavin Newsom’s office and the state’s economic development agency did not immediately respond to requests for comment.

Mr Musk moved to Texas to focus on two big priorities for his companies: SpaceX’s new Starship vehicle, under development on the Gulf Coast near Brownsville, and Tesla’s Gigafactory in Austin.

Texas has no personal income tax, while California imposes the highest personal income levies in the nation on its wealthiest residents.

Mr Musk, the world’s richest person according to the Bloomberg Billionaires Index, moved his private foundation to Texas in December.

It is the company’s third-biggest market in the US after California and Florida, although years of opposition from car dealers mean it could not sell its electric cars directly there.

In 2010, Tesla bought a closed auto plant across the San Francisco Bay in Fremont.

About 10,000 people work at the plant, which was a former joint venture between General Motors and Toyota, and scores of other Tesla employees work at showrooms, service centres and offices throughout the region.

Mr Musk’s long-term relationship with California soured in the spring of 2020 during the first wave of the coronavirus.

When Alameda County ordered production stopped at Tesla’s plant in Fremont, he defied public health officials by closing late and reopening early, blasting the rules as “fascist” on an earnings call.

Mr Musk briefly sued the county, but Tesla has continued to expand its footprint in the Golden State.

A new “Megafactory” that will make Mega packs, the energy-storage product Tesla sells to utilities, is under construction in the Central Valley city of Lathrop.