Electric automaker Tesla is moving its corporate headquarters from California to Austin, CEO Elon Musk said Thursday, a stunning announcement that continues Austin's rise as a technology hub.
Musk broke the news during the company's annual shareholders meeting Thursday afternoon, which was held for the first time at the $1.1 billion manufacturing facility Tesla is building in Travis County, on a 2,100-acre property at Texas 130 and Harold Green Road.
"I'm excited to announce we're moving our headquarters to Austin, Texas," Musk said. "We're going to create an ecological paradise here around the Colorado River."
Musk had previously threatened to move the company's headquarters from Palo Alto, California, to Texas or Nevada in 2020, following disagreements with California lawmakers. The CEO did not mention that dispute during Thursday's shareholders meeting.
A 'strategic move' for Tesla
Dan Ives, an analyst with Wedbush Securities, said Tesla's decision is a major win for Austin and also makes sense for the company.
"This is a major strategic move for Tesla that makes a ton of sense," Ives said. "The tea leaves were there for Tesla to make this move and it’s a huge feather in the cap for Austin."
Musk had announced in July 2020 that Austin was the choice for the factory, where the company plans to produce its Cybertruck, Semi, Model 3 company sedan, Model Y and batteries. Musk said Thursday that the Austin facility may also produce Tesla ATVs.
Musk said Thursday that Tesla is making great progress on the Austin-area factory, which the company has dubbed Giga Texas. The first vehicles are expected to roll out of the facility as early as this year, and the facility could bring more than 10,000 new jobs to Central Texas through 2022.
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Local government entities last year approved millions in tax breaks to help lure the Tesla factory to Central Texas. The Del Valle school board approved a tax break that could be worth about $46.4 million over 10 years, while Travis County commissioners approved an incentives package worth at least $14 million over 10 years.
Musk said Thursday that while Tesla is moving its headquarters to Austin, the company will continue to expand in California, but said there is a limit to how much it can scale in the San Francisco Bay area.
“To be clear, we will be continuing to expand our activities in California,” Musk said. “Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory, it’s jammed.”
However, he said that in California, “it’s tough for people to afford houses and people have to come in from far away,” Musk said.
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Other Musk-led companies have been expanding into Austin over the course of the pandemic. They include Musk's tunneling firm the Boring Company, which has had a presence since last year and purchased land in Bastrop county; Neuralink, Musk's neurotechnology company, which had job postings for Austin in recent months; and Musk's private foundation, the Musk Foundation, which relocated to Austin summer of 2020.
SpaceX, which already has had a South Texas presence with operations near Boca Chica, could also be expanding into Austin, as it has posted listings for jobs in the area, although it's unclear what the company's plans may be.
Musk also said Thursday that the company planned to start selling Tesla Insurance in Texas next week.
'A very strong validation of Austin'
Tesla's announcement Thursday comes less than a year after software giant Oracle announced in December that it was moving its corporate headquarters from California to Austin. A number of other technology giants – including Apple, Facebook, Google and Amazon – have recently expanded their operations in Central Texas, adding to the tech sector that has long been anchored by Round Rock-based Dell Technologies. Samsung has also said that it is considering two Central Texas sites – one near its existing Austin operations and one in Williamson County, near Taylor – for a $17 billion chip manufacturing facility.
"I think the decision by Tesla to move its headquarters here is a very strong validation of Austin, Texas and the talented people we have here in the Central Texas region," said Gary Farmer, chairman of Opportunity Austin, the Greater Austin Chamber of Commerce's regional economic development initiative.
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Matt Patton, an economist with Austin-based Angelou Economics, said Musk’s annoucement didn’t come out of the blue, given his favorable comments about Texas relative to California over the past year and the other moves he has made to establish numerous operations here.
“But whether or not it’s a surprise, it’s still a big deal,” Patton said. “Certainly there are going to be a lot of eyes on Austin” as Tesla’s official new base of operations.
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He said being the home of Tesla's headquarters is likely to fuel increased investment in Austin, both from Tesla and from other companies and entrepreneurs hoping to tap into the considerable “sphere of influence” commanded by Musk – who has an exceptionally high profile for a corporate executive and can influence Wall Street stock prices with a simple tweet.
“How many years have we thought of Austin as this innovative tech hub? And now it’s getting even stronger,” Patton said. “Coupled with some of the other relocations we have had, both to Austin and to Texas in general, (the Tesla announcement) is just one of those things where the momentum seems to be building on itself.”
Jon Hockenyos, president of Austin-based economic analysis firm TXP Inc., said winning a corporate headquarters is generally considered “the pinnacle of economic development recruitment.”
That’s because the location of a headquarters “is seen as being a place where a company is most likely to expand and least likely to leave,” he said, which provides communities with added security.
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Musk previously said the Austin-area facility had become one of his biggest focuses. In December, when Musk confirmed he had moved to Texas, he said the move was to be closer to his two the Giga Texas factory and to SpaceX's starship development in South Texas.
Musk said on social media in June that he has a home near SpaceX's South Texas facility. He has not publicly said he has a residence in Austin, but said Thrusday that he was in the Texas capital city during the February winter storms, staying in a house with no power, heat or internet access.
American-Statesman reporters Lori Hawkins, Bob Sechler and Philip Jankowski contributed to this report.
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