Tesla is relocating its headquarters to Austin, Texas, from Silicon Valley in the tech world’s latest major shift to the Lone Star State.
CEO Elon Musk revealed the decision during a shareholders meeting at Tesla’s factory just outside the Texas capital, saying the company was contending with a “limit to how big you can scale in the Bay area.”
Musk cited the lack of affordable housing and long commutes for those based in the Bay Area, echoing rationale cited by other companies that have moved operations away from one of the most expensive metros in the country.
The company is currently headquartered in Palo Alto and established its first factory in Fremont. Musk likened the factory’s growth from “a kid in their parent’s shoes” to “Spam in a can,” he said the company was expanding, not abandoning, its presence in the state.
In “continuing to expand” Fremont operations, Tesla hopes to “increase Fremont output by 50 percent,” he said.
Tesla’s move will put the company’s headquarters closer to the base of SpaceX, another of Musk’s companies, and where the CEO lives.
It’s not immediately clear how many employees will be affected by the company’s HQ relocation.
Texas Gov. Greg Abbott — who has lauded the state’s lower taxes and smaller regulations for attracting companies — tweeted to welcomed the company to “the land of opportunity and innovation.”
In moving the headquarters out of California, Musk is also making good on a threat he made earlier in the pandemic when he expressed frustration about public health protocols that forced a pause in production in Fremont.
Tesla announced in July 2020 the company’s plans to build a factory in Travis County, right outside of Austin, for $1.1 billion. The Austin American-Statesman reported it would be one of the largest economic development projects in the state’s history at the time, planned for 2,100 acres.
Tesla isn’t the first company to relocate from California to Texas during the pandemic. Oracle and Hewlett Packard Enterprise last year announced they were relocating headquarters to the state.