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Tesla CEO Elon Musk made a surprise announcement this week that he intends to establish a global engineering headquarters in Palo Alto less than a year after opening Tesla’s main headquarters in Austin.
The electric vehicle carmaker is moving into the former headquarters of HP Inc. in Palo Alto, where Tesla expects 1,400 employees to work. Musk’s joint announcement with Gov. Gavin Newsom suggests a thaw in frosty relations between the two.
After co-founding Tesla in California, Musk moved the company’s home base to Austin in 2021 after becoming frustrated with restrictions in California during the COVID-19 pandemic. Musk tweeted that a lockdown of his Tesla factory in Fremont was “the final straw” and that he’d move its headquarters out of the state.
Musk also threatened to abandon the Fremont facility entirely, depending on how his company was treated in the future. In a 2020 interview, the tech leader famously said California was falling behind after getting too comfortable, transforming from a land of opportunity to a place with too much regulation, litigation and taxation.
“If a team has been winning for too long, they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore,” he said. “California’s been winning for a long time. And I think they’re taking them for granted a little bit.”
He also has downplayed the importance of Silicon Valley for tech companies.
“Silicon Valley, or the Bay Area, has too much influence on the world, in my opinion,” Musk said.
When Musk announced the Texas headquarters move to shareholders, he made it clear that Tesla would continue to grow in California. It has more than 47,000 employees there today.
“So this is not a matter of, sort of, Tesla leaving California,” he said at the time.
Musk was cordial with Newsom during Wednesday’s engineering headquarters announcement, thanking him for being one of the first to put down a $100,000 deposit for the Roadster model the company produced starting in 2008.
“It’s a point of pride — always has been, for me — that Tesla is a California company,” Newsom said.
While the California governor tangles routinely with conservatives on divisive political topics, he has been careful not to insult Musk. When Tesla moved its headquarters to Texas, Newsom said he had “reverence and deep respect” for Musk.
California’s leader also has long argued that Tesla was able to become the largest passenger EV maker in the world because of the state’s embrace of EVs. Newsom lauds California as an economic powerhouse that outperforms red states, including Florida and Texas, in terms of jobs, productivity, wealth and innovation, while also serving as a bastion of tolerance and progressive social policies.
Besides the lack of freedom during the pandemic, Musk also previously said it was difficult to build up a workforce in California where people had a hard time affording houses. “We’re taking it as far as possible, but there’s a limit to how big you can scale it in the Bay Area,” he said.
Texas Gov. Greg Abbott said Musk was drawn to Texas because of tax benefits and freedom to expand, according to a 2020 interview on CNBC.
“He wanted to get into a state where he had more freedom where he could expand the way he wanted to expand. He has a remarkable vision that goes far beyond just this one announcement,” Abbott said on CNBC’s “Squawk Box.”
Tesla went on to spend more than $1 billion to build a massive factory, dubbed GigaTexas, in Austin to produce new vehicle models. The factory was expected to have 10,000 employees by the end of last year.
During a tour Wednesday with Newsom of the new California offices, Musk described it as “effectively a headquarters of Tesla” and that it’s “kind of a dual-headquartered company.” The Palo Alto team will focus on hiring engineers proficient in research development and artificial intelligence, which will help accelerate efforts to produce autonomous driving and robot technology, he said.
“This was HP’s original headquarters, and so I think it’s a poetic transition from the founders of Silicon Valley to Tesla and we’re very excited to make this our global engineering headquarters,” Musk told CNBC. “And we’re a California-Texas company.”
Musk has expanded his other ventures – SpaceX, Neuralink and the Boring Co. – in Texas as well. He’s relocated his private foundation and the Boring Co. headquarters to the Austin area. In Bastrop County, SpaceX is building an office and Neuralink is building out an office and lab space in the Del Valle area, according to the Austin American-Statesman. SpaceX also has built a launch pad in South Texas for its Starship rockets.
So far, there have been no plans to move San Francisco-based Twitter to Texas following Musk’s much-talked-about $44 billion takeover of the social media platform in 2022. But that hasn’t stopped Texas leaders from trying.
“Bring Twitter to Texas to join Tesla, SpaceX and the Boring company,” Abbott tweeted at the time of the purchase.
Bloomberg contributed to this story.
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