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UPDATE: On Oct. 8, the Registry real-estate news site reported that Tesla has agreed to lease 325,000 square feet of a site that formerly housed HP’s headquarters, at 1501 Page Mill Road, in Palo Alto. This space will not be used as Tesla’s HQ, however.
Tesla Inc., the electric vehicle and energy storage company, is moving its Palo Alto-based headquarters to Austin, Texas, the company’s CEO Elon Musk said Thursday afternoon.
The announcement came during an annual shareholder meeting hosted from inside one of Tesla’s Gigafactories also located in Austin.
Musk gave vague explanations for the move, but cited high housing costs and long commute for workers as well as growth limitations imposed by being in the Bay Area.
“It’s tough for people to afford houses and a lot of people have to come in from far away. … There’s a limit to how big you can scale in the Bay Area,” he said.
But this is not the end for Tesla’s story in California. Musk added that the company will “increase output” from its Fremont and Nevada factories by 50%.
“This is not a matter of Tesla sort of leaving California,” he said.
Propping up the benefits of the new location, Musk said the new headquarters will be five minutes from the airport and 15 minutes from downtown. And while the company will continue to grow in California, Tesla will expand “even more so” in Texas.
Tesla, a company that has grown exponentially since it was founded in 2003 and set the standard for electric vehicles, first arrived to Palo Alto in 2009, moving from San Carlos into a 350,000-square-foot building in Stanford Research Park.
The company’s former chief technical officer and co-founder J.B. Straubel said one large incentive to come to Palo Alto was the city’s proximity to Stanford University. (Straubel is also a Stanford alumnus.)
Palo Alto City Manager Ed Shikada expressed disappointment in the news, noting, “Tesla has been a member of the Palo Alto community for over a decade.”
But, he said in an email to this news organization, “This change reflects the innovative cycle and nature of Silicon Valley, where we are seeing highly mobile companies in our region evolve. We look forward to continuing to adapt to the economic forces at play.”
Musk recently became an increasingly vocal critic against the golden state and Silicon Valley. In an interview during The Wall Street Journal’s annual CEO Council summit, the Tesla CEO revealed that he moved out of California as it had become “complacent” in its leading economic status. He also suggested that Silicon Valley had become increasingly irrelevant.
“I think we’ll see some reduction in the influence of Silicon Valley,” he said in the interview.
Tesla is not the first company to make an exit out of Palo Alto during the pandemic.
In August, Palantir Technologies quietly moved out of its Palo Alto headquarters at 100 Hamilton Ave. to Denver, Colorado. The company’s CEO Alex Karp previously expressed frustrations with Silicon Valley’s “increasing intolerance and monoculture.”
Hewlett Packard Enterprise also announced in December that it will move from Palo Alto to Houston. HP Inc., Hewlett Packard’s consumer product arm, remains headquartered in the city.
Fewer jobs means more opportunities to build housing.
The City Council is way behind the shift in the economy.
One of the most innovative companies in the world gone from Palo Alto. Sad day for the city.
Time for a new city manager.
My guess is that Elon Musk will spend a lot of time in Palo Alto.
I know that his personality rubs the genteel personality prized by Palo Alto, but I like the guy.
Have any readers done as much to move the world to electric cars? Also, his SpaceX has provided the only alternative to the Russian heavy launches to the international space station.
He plays the game with locations and taxes while the rest of us look on.
I have no connection to EM , except to admit his willingless to take the chance of loosing everything. Have you?
Best wishes to all flamers.
Seldom mentioned by these Masters of the Universe who move their operations to Texas is it’s negligible taxes, 20th century labor laws and regulations of corporations. But you can bet it’s at the top of their list for all of them.
Musk first, concern about employees second (housing, commutes). Who does he think he’s kidding when those employees he cares so much about are going to lose their jobs.
Perhaps the Tesla employees may want to read Frank Bruni’s article in the NYT this AM entitled “Very disturbing things, deep in the heart of Texas.” Voter suppression, anti-masking programs in the heart of a pandemic, overrun ICU’s, guns everywhere, gerrymandering to smother the votes of anyone not voting Republican, draconian plans to eliminate abortion access, and just two words– Greg Abbott. Ok, Elon will get his low taxes, the employees with get a Red State dystopia of ever growing proportions. By the way, have you ever looked into Austin real estate? Cheaper than PA, but by some estimates “one of the most overvalued in the United States” (see https://www.noradarealestate.com/blog/austin-real-estate-market/).
The Bay Area is not the magnet it once was because it ignored the most fundamental ingredient of growth and prosperity : a good environment in which to work and grow. While the leadership – Zuckerberg, etc – panders to ESG campaigns and propaganda, they and local governments didn’t plan and build sufficiently so that there would be enough housing, transport, and utilities. So, everyone except the wealthiest is desperate for decent and affordable housing, too many are stuck in traffic. Not a good Environment, not Sustainable, and terrible Governance. Government here is Democrat – at every level – and the result is cause to move away. Activists pushing radical agendas are destroying basic quality of life whether it’s safe streets, safe classrooms, or safe homes (safe from those who would steal your cooking gas, your bacon, and your every privacy). At war with the police, releasing the predators from jail, ignoring theft and assaults – liberal AG’s with no interest in law. Why would anyone NOT move to Texas, etc?
Cheese Guy, have you ever been to Austin? You seem to be using a VERY broad brush, gathering up all the worst things you’ve ever heard about the most awful things that happened in the deep dark woods of Texas, but Austin is very nice–actually, they voted against Trump almost exactly the same percentage as did Philadelphia, for example. I was in Austin last Christmas. They had mask mandates, despite what the governor said. and what’s this about the real estate values of Austin? Because says your link, someone in Florida said so? What are you basing THAT conclusion on? I think maybe Mr. Musk knows Austin quite a bit better than you do.
by the way, even when leaving Austin, did you know Houston had a Black lesbian mayor? You can really make yourself less foolish looking if you would actually travel places rather than believing everything some pretend superior media tells you to think.
funny. all of this because this man left Palo alto and the bay because he is a free-thinker, and he gets grief by people who really are not very much for free-thinking, but only pretend to be.
Elon: “it’s tough for people to afford houses” (Mercury News)
California: “let’s ban houses”
Joining the Exodus Club. Calexit? We shall have to start thinking of names for these former California businesses moving to greener areas.
California is business unfriendly. Thank you Newsom.
Musk is people / worker unfriendly. Remember when he objected to protecting his workers and then 150+ of the workers at his Fremont plant got Covid? Remember former Mayor Fine toadying up to Musk at the same time?
Frankly, it’s about time–Tesla’s industry is trodden ground now. Big companies grow up, and they leave Palo Alto. It is the way of the world. We cannot hold within our city limits the headquarters of every company that starts here. What we can do well in a city of our small size is foster innovation. Coyote Hill will soon have a new tenant, and they in time will have their own success story. This turnover is not only good for our economy, it is essential to retain our city’s position of leadership in the industry.
Makes a lot of sense moving HQ to be close to Giga Texas.
I just wished he moved to Mars already.
Texas, no thanks!
Most of the hand-wringing reports of Tesla’s “move” ignored the reports that they’ve leased a big new office here https://www.mercurynews.com/2021/10/08/tesla-agrees-to-big-office-lease-in-palo-alto-despite-hq-exit/ and will be expanding capacity at the Fremont plant.
Musk just wants the publicity and the tax breaks.
We moved to the Lone Star State (San Antonio) several years back.
What Mr. Sails conveyed is partially correct. In college towns like Austin (University of Texas) and San Antonio (Trinity University), the mindset is somewhat liberal and enlightened. These communities are not reflective of the racist redneck, bible/gun-toting, anti-vax, anti-pro choice mentalities we read or hear about in the news.
Texas is a big state with room enough for all types of folks.
California businesses have been shifting towards Texas for awhile due to housing affordability and corporate tax incentives. It is nothing new.
And don’t most Palo Altans yearn for quieter town with less congestion and fewer housing issues?
Tesla will be maintaining its facility in Fremont going so all is not lost.
The trouble with some Palo Altans is that they want to have their cake and eat it too.
In other words, the business tax revenue is fine providing there are fewer businesses and newer residents cluttering up their precious upwardly-mobile ecosystem.
One cannot have it both ways so get over it…Elon Musk does not need Palo Alto.
From the way I read it, Tesla’s move is only their HQ for tax purposes. They will not be moving their staff out of state and in fact will probably still be employing and hiring more staff in both Fremont and Palo Alto.
Palo Alto has no business tax and derives no benefit from the companies getting too large for the area, but many significant negatives from the overgrowth resulting from tech whales taking over/unfettered growth.
Musk has it exactly right, and moving the headquarters is a positive for him and Palo Alto. Facebook moved when they got too big and that was exactly right, too, though it would have been better if they’d found a way to diversify in multiple locations. The ridiculous handwringing above sounded similar then.
The Bay Area is suffering from tech whales thinking they can grow indefinitely and take over, and telling themselves (and everyone else) horrible tales about the community members living here who sacrificed to put down roots (in the same high-cost situation that has been the case give or take for 40 years). It allows the tech whale leaders to sleep at night while relentlessly destroying those people’s communities, quality of life, air quality, family time (re: overgrowth, clogged streets, pollution, loss of access to the wider area, time, lost amenities, costs of urbanization, etc). Again, just pointing out that Palo Alto has no business tax and the existing residents not only derive no benefits from this abuse, they have been relentlessly libeled.
There’s actually a reason that many of the companies that built Silicon Valley began in garages. Stanford University is still here, is still a draw, will still produce innovators who want to start up here. In fact, the tech whales’ inclination to take over directly conflicts with Stanford’s wishes to expand.
As we saw in the pandemic, some of these companies’ moving out some of their workforce and not concentrating everyone here had benefits for Bay Area costs, pollution, traffic, etc, and were better for the workers’ quality of life. There is no inherent good to overgrowing here.
Thank you Elon Musk for this positive step. Wishing you all the best for transforming transportation in a positive way.
Palo Alto was on the map long before Tesla ever existed and it will still be here long after Tesla has faded away. Palo Alto will continue to do just fine. Goodbye Elon, enjoy your cowboy hat and country music.
Look at how many tech whale execs have given up their US citizenship to avoid taxes by becoming citizens of Cyprus while their companies spend huge amounts of money lobbying against paying any local taxes and supporting the YIMBY’s and PAF while WE get stuck paying for THEIR growth with increased density, unaffordable under-parked housing, jammed roads and myths about how we’re all going carless, microhousing for their techies, congestion, pollution, lack of privacy …
And then there’s the drought where we’re lectured to conserve so they can grow even more!
The percentage of full-time employees with benefits keeps dropping while the percentages of struggling gig workers and contractors keeps rising — and WE get stuck with paying for the homeless THEY create. DoorDash, Uber, Lyft etc. spent $200,000,000 to deny their gig workers benefits and a living wage and to shift the cost from them to US! Shameful.
Did Musk care that his workers were getting Covid? Not one iota. He protested the common sense regulations by threatening to leave. Bye bye!
Wait a second. If I like Country music, will JR boot me out too (while online name will say it’s my own fault)?
@John B. Sails, lots of us like Country. Allow me to recommend the Austin Lounge Lizards; if you don’t know them, you should.
You’re more than welcome to listen to any type of music you’d like in Palo Alto. We’re tolerant of all tastes and cultures. If you expect the same in Texas, you’re in for a shock.
Palo Alto is better positioned as an incubator and nursery, and should not view this as a loss when a large corporation flies the nest. My emphasis would be to nurture what a remarkable incubator Palo Alto is. As President of our Sister Cities, numerous international cities seek to emulate the culture we hold here. They ask, how can we be like Palo Alto? Of course, there are some rough spots we manage here, but in general we are best as starting and incubating, and feeling some love loss when the successful ventures fly the nest. My hope has been that we focus on incubation – the impact is lower than large firms, and the pace is more exciting. Just wanted to put up a view that is not as dark as the balance of the commenters.
Incubator, huh? Like that Mike Judge show ‘SL’? Funny show. Not sure if it is very complimentary to P.A., but…
btw, I’m one of those red state-raised people who always idealized California, so I came here. Buck and Merle (and later Graham, and Dwight) chose to make country music out here, and didn’t Jerry Garcia try to get a bluegrass band together while working at a music store in downtown P.A.? right before John Fogarty in the East Bay was telling everyone how cool the music of South was? Johnny Cash did not make live albums at SOUTHERN prisons–Can you imagine? CA was supposed to be do your own thing, which only has a sincere meaning if others can do their own things too. So, the Hoover institute can be here, and George Shultz and his wife were never bothered in SF or Condy Rice at Stanford, and really no reason for Anthony Bordain to be shocked when he saw people eating red meat and ‘hard-drinking’ I wonder, though, with wokedom running rampant; Did the internet tribes(and Covid) wreck Ca’s ‘do your own thing’ mentality only temporarily or forever?
With every ounce of fiber in my body, I upvote John B. Sails’ first comment in response to cheese guy. You are my online hero of the day.
The final paragraph of the story is a bit confused regarding “Hewlett Packard”. Hewlett-Packard (HP) split into two entirely separate companies (not just arms) in 2015, one being HP Inc of printer and laptop fame (which owns the “old” HP HQ building at 1501 Page Mill Rd, including the “Founders’ Office”). Tesla is apparently soon leasing much of this building complex.
The other company is Hewlett Packard Enterprise (HPE), which owned the “new” HP HQ building at 3000 Hanover St, but sold it and moved to the San Jose area in 2018. It’s the one that announced late last year that it will move its headquarters from San Jose to Houston.
Tesla could reduce its prices if they built the cars in China (or maintain the current prices and make even more money) by saving on manufacturing costs.
Apple has been doing this for years and no one complains about its prices.
This cost-cutting measure is good for the shareholders.
If a flagship Apple iPhone model was manufactured in the United States, it would retail for well over $5K and a US-made basic MacBook would cost close to $10K or more.
Thank goodness for cost-effective Chinese and 3rd world manufacturing as it helps to keep American consumer purchasing power somewhat intact.
American labor is expensive even at the $15.00 unskilled minimum wage level and US businesses need to keep their payroll + benefits expenditures low in order to survive.
US corporations must also answer to their shareholders and stock dividends will always take precedence over increases in American employee salaries and wages.
Thus it is imperative that most consumer manufacturing be conducted overseas where the labor force is considerably cheaper and employee benefits either ignored or non-existent.
A successful global economy is dependent upon exploitation.
Disposable consumer goods are best manufactured in places like China or in third world countries where employees work for pennies on the dollar.
The cost of living in those countries is relatively low and chances are the workers wouldn’t know what to do with the extra cash anyway.
On the other hand, high quality, future collectibles, and esoteric products made in America or in modern industrial Western European countries are a buyer’s best best if longevity and overall quality/worksmanship is a priority.
An Apple iPhone is just another disposable consumer electronic product and no big deal.
Musk is leaving primarily because he has a huge income tax windfall and does not want to pay personal income taxes and Texas does not have state income tax. He’s also leaving because he’s upset at Bay Area local governments being concerned about the welfare of his employees, who were getting sick with Covid because he was forcing them to come to work and he resented that. He’d much rather work in a state that thinks wearing masks and getting vaccinated are a bad idea in the middle of a pandemic. We know for sure that Musk does not care at all about the well being of his employees. I’m sure within a few years he’ll be complaining about Texas after the honeymoon ends.
I am stunned that Local Resident’s blatant ad-hom insult stream is fully accepted so much that the moderators must censor any rebuttal. If we are being honest, this lack of free-thinking? could be a reason he left, don’t you think?