Tesla isn’t just building a factory in Austin, Texas; it’s also relocating its headquarters from California to the city. Elon Musk announced the move at Tesla’s most recent annual shareholder meeting, where he also clarified that the company still intends to increase production at its California plant by 50%.
However, he explained that there is “a limit to how big you can scale in the Bay Area” because house prices are sky-high, resulting in long commutes for workers who must live elsewhere.
The move isn’t entirely unexpected: Musk previously threatened to relocate Tesla’s headquarters out of California after coronavirus lockdowns forced the company to halt production in the state.
During an earnings call in 2020, he even called the lockdown orders “fascist,” and then personally relocated from Los Angeles to Austin a few months later.
Having said that, it’s worth noting that Tesla is now based in a state where it can’t sell its cars directly to buyers, as it has done since its inception, due to pro-dealership laws.
According to CNBC, Musk relocating to Texas would result in lower taxation. The state has no personal income tax, whereas California has some of the country’s highest income tax rates.
Furthermore, the Texas Economic Development Act provides tax breaks to companies that build facilities in the state.
Shareholders also voted on proposals to improve company governance at the meeting. According to reports, they agreed on the majority of the proposals with the exception of a couple that the company opposed, one of which would require the company to publish reports on its efforts to diversify its workforce.
Tesla stated in a report (PDF) last year that its leadership in the United States is still predominantly white and male, despite the fact that its workforce is 79 percent male and 34 percent white overall.
Only a few days ago, the company was ordered to pay $137 million in restitution to a former Black employee. The plaintiff had accused Tesla of turning a blind eye to discrimination and racial abuse going on at its plant in Fremont, California while he worked there.