Tesla moving HQ from California to Austin: 'A huge feather in the cap' for region
One of the biggest economic development announcements in Austin history came with little fanfare and almost no warning.
Speaking to shareholders Thursday, Tesla CEO Elon Musk mentioned almost casually that the electric automaker — one of the world's best-known and most valuable companies — has decided to move its corporate headquarters from California to Austin.
The stunning move — which came as a surprise to many local and state officials — continues Austin's ascent as a technology hub and adds to Tesla's swiftly growing presence in the region, as the company is building a $1.1 billion manufacturing facility in southeastern Travis County.
"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."
Tesla's move to Austin:Here's what we do — and don't — know so far
Musk had previously threatened to move the company's headquarters from Palo Alto, Calif., to Texas or Nevada in 2020, after disagreements with California lawmakers. Musk did not mention that dispute during Thursday's meeting.
Dan Ives, an analyst with Wedbush Securities, said Tesla's decision is a major win for Austin and 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 and Tesla left a number of questions unanswered. The announcement didn't indicate a timetable for the move, how many employees might be coming to Central Texas or how many jobs might be created. The company also didn't say where the corporate headquarters would be located, although Musk seemed to hint that it could be on the 2,100-acre property at Texas 130 and Harold Green Road in Travis County where the company is continuing construction of its newest manufacturing facility.
Travis County Commissioner Jeff Travillion, whose district encompasses Tesla’s factory, said Tesla has not told county officials how many corporate jobs are likely to accompany the decision, or whether the headquarters will be at the site of the new factory or somewhere else in the city.
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 might 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 as early as this year, and the facility could bring more than 10,000 new jobs to Central Texas through 2022.
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, and Travis County commissioners approved an incentive package worth at least $14 million over 10 years.
Tesla's announcement 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 it is considering two Central Texas sites — one near its current 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.
Amber Gunst, CEO of the Austin Technology Council, said that while the timing of the announcement was a surprise, she was not shocked that Austin had been chosen as Tesla’s new headquarters.
“Austin has just proven time and time again that we have a stable economy, that we've got a state and local government that is willing to work with companies to provide opportunities and jobs to the area," Gunst said. “It sends a message not just to Silicon Valley and to California, but to the entire country, that ... there's a lot to offer here. And that if cities and states are not making it transparent and aware to companies that they're valued and that they're wanted there, then companies will find another place to go."
Matt Patton, an economist with Austin-based Angelou Economics, said Musk’s announcement 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.
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.”
Travillion, the Travis County commissioner, said the move is a clear sign that Tesla and Musk are pleased with how their plans to expand in the region have been progressing.
“At the end of the day, the primary thing is this demonstrates that Austin has a really good business environment, and that we have put all the fundamentals in place” to develop a local workforce coveted by employers, he said.
Ed Latson, executive director of the Austin Regional Manufacturers Association, called the headquarters announcement "great news" and said the decision "really demonstrates the commitment Tesla has to Central Texas."
"Being named a headquarters will help Austin attract more talent, more suppliers and amplify the impact they are having in the region. It also confirms we will be at the center of innovation for electric vehicles for decades," Latson said
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.
In a statement, Austin Mayor Steve Adler said, “We welcome Tesla home," and called the automaker "a tech company that creates the clean manufacturing, middle skill jobs Austin needs."
Musk said that while Tesla is moving its headquarters to Austin, the company will expand in California, but he 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.
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 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 he said Thursday that he was in the city during the February freeze, staying in a house with no power, heat or internet access.
Other Musk-led companies have been expanding into Austin over the course of the pandemic. They include Musk's tunneling firm the Boring Co., 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 moved to Austin in the summer of 2020.
SpaceX, which has a South Texas presence with operations near Boca Chica, could also be expanding into Austin, as it has posted listings for jobs in the are, although it is unclear what the company's plans might be.
Musk also said Thursday that the company planned to start selling Tesla Insurance in Texas next week.
American-Statesman staff writers Lori Hawkins, Bob Sechler and Philip Jankowski contributed to this report.