Electric carmaker Tesla is to move its headquarters from California to Texas, chief executive Elon Musk has said.
The announcement comes after the billionaire tycoon was embroiled in a row with West Coast politicians over their handling of the coronavirus crisis.
Tesla will be the latest in a number of firms, including Hewlett Packard and Toyota, to relocate to the Lone Star State, which has cheaper labour and less strict regulations, while California has relatively high taxes and living costs.
Speaking at the company’s annual general meeting, held at the Texas car factory in Austin, Mr Musk said the California plant in Fremont was “jammed” and staff found it difficult to afford houses in the area.
He said: “We’re taking it as far as possible, but there’s a limit to how big you can scale it in the Bay Area.
“Just to be clear, though, we will be continuing to expand our activities in California. This is not a matter of leaving California.”
He pointed out the firm plans to increase output from its sites in California and Nevada by 50%.
Mr Musk himself moved to Texas from California in December to focus on the electric carmaker’s giant new manufacturing complex and his SpaceX rocket company, which has a launch site at the state’s southern tip.
The tech entrepreneur has also had a fractious relationship at times with California, having previously threatened to move Tesla headquarters and future projects to Texas during a row over the closure of the Fremont factory during the COVID-19 pandemic.
At the meeting, he showed off a slide of a cowboy-style belt buckle emblazoned with “Don’t Mess With T” – the T in the style of the Tesla logo.
The phrase is based on a well-known Texas anti-littering campaign – Don’t Mess with Texas.
While welcoming Tesla’s announcement that it will expand production in Fremont, business leaders highlighted the headquarters move as the latest sign of the region’s ongoing issues.
Jim Wunderman, president and chief executive of the Bay Area Council business group, said: “Mr Musk’s announcement highlights yet again the urgency for California to address our housing affordability crisis and the many other challenges that make it so difficult for companies to grow here.”
Last year, tech giant Oracle decided to move its headquarters from Silicon Valley to Austin, pointing out the move would give its employees more flexibility about where and how they work.
At the AGM, Mr Musk also pointed to the company’s record vehicle deliveries this year, while noting that global supply-chain disruptions that have led to a shortage of computer chips remain a challenge.
He said: “It looks like we have a good chance of maintaining that into the future. Basically, if we get the chips, we can do it.”
As a result, production of Tesla’s angular Cybertruck pickup is not likely to begin before the end of 2022, he said, estimating the company would reach “volume” production of the vehicle in 2023.
“We should be through our severest supply chain shortages in ’23,” he said.
“I’m optimistic that will be the case.”
:: Listen and subscribe to The Ian King Business Podcast here.
Tesla said last week that it delivered 241,300 electric vehicles in the third quarter, even as it wrestled with the shortage of computer chips that has hit the entire car industry.
So far this year, Tesla has sold around 627,300 vehicles. That puts it on pace to soundly beat last year’s total of 499,550.