Tesla is moving its headquarters to Texas from California

It'll be based in a state where it can't sell its cars to locals directly.

Sundry Photography via Getty Images

Turns out Tesla isn't just building a factory in Austin, Texas — it's also moving its headquarters to the city from California. Elon Musk has announced the move at the company's most recent annual shareholder meeting, where he also clarified that Tesla still plans to expand production at its California plant by 50 percent. He explained, however, that there's "a limit to how big you can scale in the Bay Area," because house prices are sky high, which means long commutes for workers who have to live elsewhere.

The move doesn't come entirely as a surprise: Musk previously threatened to move Tesla's headquarters out of California after coronavirus lockdowns forced the company to suspend production in the state. He even called the lockdown orders "fascist" during an earnings call in 2020 and then personally relocated from LA to Austin a few months later. That said, it's worth noting that Tesla is now based in a state where it can't sell its cars to buyers directly, which has been its approach from the beginning, due to pro-dealership laws.

As CNBC notes, Musk moving to Texas means he'd be paying less taxes. The state has no personal income tax, whereas California has some of the largest income tax rates in the country. Further, the state has been offering companies tax breaks to build facilities in the state under the Texas Economic Development Act.

During the meeting, shareholders also voted on proposals to improve company governance. The New York Times said they agreed on most of the proposals aside from a couple that the company opposed, one of which would require the company to publish reports on its efforts to diversify its workplace. Tesla said in a report (PDF) last year that its leadership in the US is still mostly white and male, while its workforce is 79 percent male and 34 percent white overall. Just a few days ago, the company was ordered to pay $137 million in damages to a former Black worker. The plaintiff accused the automaker of turning a blind eye to discrimination and racial abuse while he was working at its plant in Fremont, California.

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