Tesla on the Move: Is the EV Giant Leaving California?
This decision comes shortly after Tesla announced Austin as the site of its new gigafactory, and seems to be a continuation of the threats Musk made during the initial coronavirus lockdowns in 2020 to move Tesla out of California..
Musk Speaks Out Against COVID-19 Restrictions
Musk's comments were a direct response to California's coronavirus lockdown procedures, which forced production in Tesla's Fremont factory to temporarily shut down. This was amidst a public dispute between the Tesla CEO and officials in Alameda County, who stated that continued operations in the Fremont facility would not be safe.
In addition to lockdowns, Musk cited unreasonable housing prices as a deciding factor of the move, stating that his employees' long commutes were harming Tesla’s productivity.
Tesla’s Gigafactory, and the Cybertruck
The move is unsurprising after the decision to build Tesla’s gigafactory in Austin was made in July of 2020. The factory will be Tesla’s first facility in the United States built entirely from the ground up. The EV manufacturer has been vastly ramping up production, with another factory being built in Berlin this year as well. With sales on track to exceed one million vehicles in 2021 alone, these efforts to expand production seem more than necessary.
The Austin gigafactory will be the site of production for Tesla’s Cybertruck, a long-awaited addition to its line of electric-powered vehicles. Musk’s space exploration company, SpaceX, also operates in Texas, launching its rockets from several Texas-based facilities; these include Cape Canaveral SLC-40, Vandenberg Space Force Base and Kennedy Space Center LC-39A.
It only makes sense that more and more of Musk’s projects will take place in Texas, as he too recently made the Lone Star state his home.
Musk’s Relocation
“Frankly, I would call it forcible imprisoning of people in their homes against all of their constitutional rights,” Musk said in April of 2020 in regards to California’s lockdown procedures, “It’s breaking people’s freedoms in ways that are horrible and wrong and not why they came to America...what the F---.”
Businesses are Leaving California
This came shortly after Charles Schwab, fresh from their $26 billion dollar merger with TD Ameritrade, announced they too would be moving their main operations to Texas. The financial services firm chose Dallas as the home of their new headquarters.
So what's the reasoning behind this migration? Aside from Texas’s looser pandemic restrictions, which allow in-person operations to persist, many companies have cited a far lower franchise tax. Texas’s franchise tax is 1%, and even lower for smaller companies. Business leaders have also said operating costs overall were more affordable, with better commercial real estate prices and friendlier business regulations.
Increasing Cost for Texas Residents
The National Association of Realtors puts the median Austin home price at $367,000 in 2020, almost $70,000 more than the national median. The cost of living in Auston also increased 1.2% overall in 2021, due in part to the large influx of new residents.
But compared to the median home price of $3.3 million in Palo Alto, Austin’s home prices are far more palatable to business owners like Musk. They believe lower home prices will make life easier for their workers, and bring in more high-quality labor to their facilities.
So is Tesla Leaving California for Good?
“This is not a matter...Tesla leaving California,” Musk said, “it's tough for people to afford houses and a lot of people have to come in from far away.”
