CEO Elon Musk has made a big announcement on Thursday at the shareholder meeting by the company about the moving of the headquarters from Palo Alto, California, to Austin, Texas.
This meeting was held on the under-construction building of the vehicle assembly by Testa which is outside the Austin on the Colorado River borders nearby the airport of the city.
However, the company has been constantly planning to improve the product on the California plant irrespective of the move that they are planning.
As said by Musk, “To be clear we will be continuing to expand our activities in California.” He also added, “Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it’s jammed.”
He then added to the conversation, “It’s tough for people to afford houses, and people have to come in from far away….There’s a limit to how big you can scale in the Bay Area.”
Coming to the underway plant in Austin, he mentioned that this would take some more time to reach its entire potential even after it gets completed.
The truth is that it takes less time to construct a building by Testa compared to reach the production volume as Musk said. For example, the Shanghai plant of Tesla has completed 11 months but it took then a whole year to reach production. He has been expectation the new plant of Tesla that is available bear Austin will be able to follow the example that they have made in Shanghai.
The dissatisfaction of Musk about the California plant has been around over time. In 2020, on the earning call of Tesla, Musk went to the government official of California calling the health order for Covid.
Later on, Musk decided to personally relocate from Los Angeles to Austin where they have been living for two decades.
This enables Musk who also owns the SpaceX to reduce the tax burden and stay closer to the launch site of SpaceX in Texas.
The board of Tesla granted him the executive compensation package. This will help him to earn a good stock depending on the increase of the market cap of the automakers and other targets associated with the finance.
California has a huge personal income taxed om wealthy residents but Texas does not have any personal income tax.
This is not the first time that a company is moving its headquarters from California to Texas but before Tesla, it was Hewlett Packard and Oracle to took these big steps.
The labor laws and the huge living cost in California are higher compared to Taxes that have clear and less strict labour regulations.
As mentioned by Domenic Romano who is the Managing Partner of the New York City Romano Law that making a move can be a burden.
As he said, “From a legal perspective, there’s less of a regulatory burden in Texas.” He also added, “It’s a more business- and employer-friendly state in many ways. You have to jump through far fewer hoops in Texas or Florida as an employer than you do in California in terms of reporting requirements and more.”
Musk wrote on Twitter, “In general, I believe government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness.” He also added, “That said, I would prefer to stay out of politics.”
