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CEO Elon Musk cited housing affordability and commute times in announcing the relocation, which follows a clash between the billionaire and California officials last year.
Tesla will move its headquarters from Palo Alto, California, to Austin, Texas, the electric automaker's CEO said this week.
Elon Musk, announcing the move during an annual shareholder meeting Thursday, noted difficulties with affordable housing and lengthy commutes for employees in the San Francisco Bay Area. He pointed out that a Tesla factory site near Austin is only minutes away from the local airport and from the city's downtown.
“There’s a limit to how big you can scale in the Bay Area," he said.
Tesla is not decamping from California all together, Musk emphasized. “This is not a matter of, sort of, Tesla leaving California," he said. He added that the company would continue to expand in the Golden State. “But even more so here in Texas," he said.
Austin Mayor Steve Adler welcomed the news, saying in a statement that Tesla "creates the clean-manufacturing, middle-skill jobs Austin needs."
"We’re one of the safest big cities, with a strong innovative, entrepreneurial, environmentally-focused culture," the mayor added.
Early on during the coronavirus pandemic last year, Musk clashed with public officials in California over public health restrictions that disrupted Tesla's operations in California. Musk said last year that he'd moved to Texas.
Tesla's departure mirrors other recent relocations by companies away from California.
A working paper published by researchers at the conservative-leaning Hoover Institution at Stanford University says that 272 companies moved their headquarters out of California to other states between Jan. 1, 2018 and Jan. 30, 2021.
Relocations sped up during the first half of this year, outpacing 2020's rate by roughly double, the paper also says, with 74 companies moving their headquarters away from California through June.
Texas has been the most popular destination for California company relocations for at least a decade, according to the paper, attracting 113 companies departing from the Golden State since 2018.
Tesla operates an auto manufacturing plant in Fremont, California, which it says has more than 10,000 employees. The company's expansion plans in California include a new factory facility in Lathrop, which is about 65 miles east of San Francisco. Tesla plans to make make large energy storage devices, called Megapacks, there.
Bill Lucia is a senior editor for Route Fifty and is based in Olympia, Washington.