Chhavideep Singh
Source: The Giardian
After 18 years of enjoying the weather in the golden state, Elon Musk has recently announced at its recent shareholder meeting that it will relocate Tesla’s corporate headquarter from California to Texas.
As per the announcement, the move comes post the near competition of Tesla’s new factory in Texas for Model Y and the infamous Cybertruck.
Tesla is one of the world’s biggest electric automakers that is growing rapidly in terms of scale and market size. Started out back in 2003, Tesla was first based in San Carlos, California, then before its IPO, the company announced moving to Palo Alto which is popularly known for having Stanford University. However, those were the beginning days of Tesla where it wasn’t half as big as it is today. Now, being one of the most valuable automakers in the world, Tesla has decided to move its headquarters from California to Texas.
However, moving an HQ is not an easy task, especially considering the scale of the company. So, why would Musk choose to shift from California to Texas anyway?
Well, the answer to this is not that complex, it’s simple maths.
Texas is the centre of gravity in the United States as it is centrally located between two coasts. Texas has lower taxes as compared to California and fewer business regulations. Other than this, the most compelling reason being Texas’ overall cost of living which is way less than what an individual spends in California.
Texas Mayor Steve Adler is welcoming Elon Musk and Tesla with open arms because “it’s a tech company that creates clean manufacturing, middle-skill jobs Austin needs,” says Adler.
Also, Tesla is not the first technology company to have chosen Texas as their home. Hewlett Packard, Dell Technologies, Facebook Inc., Apple Inc., Oracle and many other technology companies either have an HQ in Texas or have a strong presence in this geography, again because of several varied reasons, lower business restrictions being a significant one.
However, having said all that, Musk clarifies that it has nothing against California and that Tesla is not leaving California. Tesla will continue to expand its operations in the state and approximately a 50 per cent boost in production is expected to be made at Giga factories in Fremont and Nevada.
It is not just Tesla that has moved to Texas, even Musk has relocated his personal foundation to Texas, not today but recently in December. Reports suggest that Texas has no personal income tax while California imposes a hefty amount. SpaceX’s Starship Vehicle and Tesla’s Gigafactory in Austin are some compelling reasons for Musk to move to Texas.