Tesla Inc.’s decision to move its headquarters from Palo Alto, California to Austin, Texas, shifts jobs in the electric vehicle industry to southern and western US states that are less taxed, lighter regulation and less likely than the coastal blue states. Provide unionization where most electric vehicles are sold.
Electric vehicle startups and established automakers have invested $24 billion in new factories in Texas, Arizona, Oklahoma, Tennessee and Kentucky.
1 EV maker’s annual meeting on Thursday puts an exclamation point on the shift in the US auto industry’s center of gravity — and it also highlights the tensions it can create.
Competition between states for electric vehicle jobs is intense, and has a political dimension. Democratic-leaning blue states such as California are home to many electric vehicle buyers and EV company investors who have strong views on climate policy.
Musk publicly clashed with California after regulators forced Tesla to suspend production in 2020 during the early months of the COVID-19 pandemic.
Many of the states seeking EV jobs are politically conservative red states, whose Republican governors are supportive of the fossil fuel industry and eager to welcome electric vehicle makers and their jobs with subsidies and regulatory streamlining.
“The Lone Star State is a land of opportunity and innovation. Welcome,” Texas Governor Greg Abbott tweeted Thursday after Tesla’s move was announced.
Tesla, the world’s most valuable automaker, now faces the challenge of taking advantage of the Texas business environment without alienating recruited workers from the San Francisco Bay Area’s vibrant technology industry. It also has to consider the larger base of Tesla vehicle customers in more politically liberal states like California and New York.
“Tesla does not want to invite criticism or attacks from public advocacy groups that have accused them of seeking a larger stimulus package or leaving California,” said John Boyd, principal of the site selection firm, Boyd Company. .
California Governor Gavin Newsom, a Democrat, on Friday praised Musk for investing in and creating jobs, including at his SpaceX facility in California.
But Newsom said the state has offered Tesla hundreds of millions of dollars in tax subsidies. “Our regulatory environment helped build a company and grow that company.”
unionize
Detroit automakers such as Ford Motor Company have a similar problem. Ford said last week that it and South Korean battery partner SK Innovation would invest $11 billion to develop a massive electric vehicle and battery assembly complex in Tennessee, larger than the automaker’s historic Rouge complex in Dearborn, Michigan.
That complex and related new operation in Kentucky could create 11,000 jobs.
The United Auto Workers union immediately called on Ford to reassure them that they would be union jobs. But in Tennessee and Kentucky, union membership is optional, and workers at other auto manufacturers in those states have so far rejected efforts to organize a UAW.
Musk publicly clashed with California after regulators forced Tesla to suspend production in 2020 during the early months of the COVID-19 pandemic. At one point, Musk threatened to move Tesla’s headquarters and future programs out of state.
Musk, one of the world’s richest men, said he moved to Texas last year, and moved into his new home wearing a Western-style bandana and shirt. California has income tax rates of up to 13.3%, while Texas has no tax on personal income.
A Tesla factory under construction is seen in Austin, Texas, US
California, however, accounted for about 15% of Tesla’s global deliveries in 2020.
On Thursday, Musk said the headquarter move is not a case of Tesla leaving California entirely, and said production from Tesla’s Fremont assembly plant and Reno, Nevada, battery factory would increase by 50%. One source said staff engineers at Tesla’s Palo Alto area offices expect engineers to stay in Silicon Valley, though some finance workers may relocate.
An odd issue for Texas officials and Tesla is that Texas law currently prohibits Tesla from selling vehicles directly to customers in the state.
Austin is the fastest-growing US metropolitan area, with its population growing by 30% between 2010 and 2020 to nearly 2.3 million.
Like other large Texas cities, Austin and its surrounding Travis County, where the Tesla factory is located, are governed by Democrats, separating it from most of Texas’ conservative, less densely populated counties.
The Austin metro area is a technology hub, home to PC maker Dell Technologies Inc., and home to large Silicon Valley companies such as Apple Inc. and Alphabet Inc.’s Google. Business software maker Oracle Corp. announced in December that it was moving its headquarters to Austin.
South Korean conglomerate Samsung Electronics is also close to begin construction of a $17 billion semiconductor factory north of Austin.
Austin’s Democratic mayor, Steve Adler, welcomed the decision, saying Tesla “manufactures the clean, medium-skill jobs Austin needs.”
Known for its quirky culture, Austin is also home to large music festivals, such as Austin City Limits and South by Southwest, drawing large crowds each year.
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But the huge growth and the influx of many well-paid Californians has faced resistance by some local residents, with out-of-state buyers buying homes for cash at double the price, frustrating many Austinians. .
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