After a tumultuous year, one of 2020’s biggest remaining mysteries may be what’s next for the founder of Tesla and SpaceX, Elon Musk. Since May, speculation has been mounting that he may move Tesla headquarters from California to Texas. With two of his major companies based in the Lone Star State—SpaceX in Boca Chica, Texas, and The Boring Company’s test tunnel outside Austin—Texas could be an attractive option for the tech mogul. But will he make the leap?
Texas offers many advantages to entrepreneurs like Musk. Its economy is among the most prosperous in the country, and the state has no personal income tax. In addition, Texas Governor Greg Abbott is pro-business and government regulations are often favorable. While Texas has a long history of oil and gas, the state’s focus on technology investment has grown in recent years and the Texas Enterprise Fund has dispensed billions in venture capital to local businesses. Musk’s businesses, both of which are focused on alternative energies, could find a willing partner in the governor for any product launches or manufacturing needs.
But despite the appeal of Texas, there are a few hindrances to Musk’s decision. California is the home to some of the world’s most advanced manufacturing and tech companies. Experts believe these companies will remain leaders in both technology and job growth for years to come. If Tesla stays, it keeps access to this supply chain, not to mention prestigious universities like Stanford and CalTech from which to draw skilled workers. It’s also possible Musk doesn’t want to uproot his family—he and his five children with partner, musician Grace VanderWaal, reside in the area.
Regardless of Musk’s personal decision, the uncertainty of the situation hasn’t gone unnoticed. Texas has offered Musk a lucrative tax incentive package if he moves the company to Texas, offering a free $50 million to develop a new headquarters. However, Texas may have made a poor choice in taking the risk. Experts are unconvinced the incentive would be worth it, citing Tesla’s unstable stock price in the past year and legacy of production delays. Plus, if Musk stays in California, the state will do whatever it can to keep him—including tax refunds from proposed battery plant expansion projects.
Without a doubt, Musk is one of the tech world’s most influential minds and both states are eager for him to make his choice. Will he stay in his birthplace, or will he see the benefits of moving to Texas? Only time will tell.
Financial Considerations
The potential of Musk’s move to Texas has Wall Street abuzz. Investors have long viewed California as a leader in the technology industry and any move to Texas could signal a shift in where the industry will flourish in the future. According to financial analyst Bob Klein, “The move would definitely be seen as newsworthy and could signal great growth for both Tesla and the Lone Star State. It could potentially catalyze a new wave of investments and opportunities for other big tech firms as well.”
The economic impact of Musk’s decision could extend far beyond the tech industry, however. Businesses in the service, health care, hospitality, and retail sectors might also benefit from an influx of new employees and the rise in their wages. Such an effect could be felt in areas that Tesla chooses as potential locations in Texas, such as Hutto, located between Austin and College Station, or the developing cities on its outskirts.
Experts agree that the effect of the move on California’s economy will also be significant as Tesla takes its tax incentives and workforce with it. The state’s coffers and potential job growth will take an immense hit. Conversely, Texas stands to gain revenues in taxes, investment in research and innovation, and employment opportunities.
The battle between California and Texas to land the big prize is real. Ultimately, Musk’s decision not only affects both economies, but could also provide a ripple effect for the rest of the country, particularly in the employment and economic outlook.
Environmental Impacts
The environmental ramifications of Musk’s move may also be considered. With California and Texas at different ends of the spectrum in terms of environmental regulations, the possible outcomes of such a move could be drastic. If Tesla does decide to move, The Boring Company and its environmental initiatives may soon follow, drastically influencing current environmental policy in the state.
The current Texas Environmental Commission follows a different line of thinking on climate change and its relationship with the oil and gas industry. The commission holds a different view than California on the impact that regulation of these industries can have on job growth and the state economy, meaning Tesla could face fewer restrictions in the Lone Star State than they would in California.
Despite the commission’s harsh stance on climate change, governor Greg Abbott has become increasingly engaged in the renewable energy, showing interest in electric cars and other green initiatives. Recent rulings by the governor have given individual counties the power to develop their own energy plans, allowing cities and towns to create their own green energy policies.
Although environmental regulations may be more lax in Texas, Musk’s presence could provide the push needed to expand renewable energy initiatives in the state. The rise of green technology in the face of a more restrictive national agenda could benefit Texas’s economy as a whole, giving the state a competitive edge in the green energy market.
Political Influence
The Musk-Texas connection could have far-reaching political implications depending on where he ultimately decides to relocate. For years, Texas has been a staunchly red state, which could be threatened by the arrival of a liberal and successful entrepreneur like Musk. This move could influence state and local politics and skew election results to favor the Democratic party, a potential consequence of his potential move.
On the other hand, it could also have benefits for both parties. The influx of money to the state could finance current Texas efforts to foster economic development and job growth. While at the same time, the presence of Tesla’s electric vehicles and other green initiatives could offer an opportunity to bridge the political gap between Democratic and Republican environmentalists.
As the nation awaits the result of the 2020 election, Musk’s potential move to Texas has become a point of discussion. Ultimately, how the state governments respond to this move could have a dramatic effect on the population and composition of both states for years to come.
Purpose of Move
The biggest question on everyone’s minds is: why? What would cause Elon Musk to take a major gamble such as this? Experts cite his temperament and personality as major factors. Since his arrival on the tech scene, Musk has been known for his eccentric style and unconventional solutions to problems. While many of his ventures have seemed like long shots at first, Musk’s tenacity has paid off dividends in the past. His declaration of a major move may be seen as an ambitious gamble and his way of shaking up the current business order.
Musk has also been notoriously vocal about his concerns with California in the past. In 2019 he tweeted about the “excessive regulation” of the state and its effect on Tesla in particular. He has publically spoken about his frustrations with the state’s heavy-handed tax policies, as well as its “draconian” efforts to maintain a foothold in the renewable energy industry.
In light of these continuous controversies with the state, it would not be surprising to see Musk make the leap to Texas. As the battle between these two states over Tesla’s next location continues to heat up, many are looking forward to the final outcome. Will Elon Musk decide to stay in California or make the move to Texas? Only time will tell.
Industry Impact
Regardless of where Musk ultimately decides to move Tesla, its departure would have a lasting impact on the Golden State. The move would leave a gap in employment and taxes that the state would be hard-pressed to fill. If Tesla does eventually relocate its headquarters, other tech companies may also decide to leave California for better incentives elsewhere in the U.S.
The effect of the move on the electric vehicle industry is also worth pondering. Tesla continues to be the leader in the electric vehicle market and any changes to the company’s structure could drastically impact the industry as a whole. The presence of Tesla in Texas could potentially bring about a new wave of electric vehicles and a competitive edge to the Lone Star State. On the other hand, the loss of Tesla as an industry leader could leave California scrambling to remain competitive.
Furthermore, the effect of this potential relocation stretches beyond the economy and into the realm of public opinion. Tesla has been attempting to break away from the traditional oil and gas industry and any evidence that they are pulling away could have a lasting effect on the public’s opinion of electric vehicles. Likewise, the announcement of Tesla’s move to Texas, if it occurs, could spur a revitalization in the electric vehicle industry, ushering in a new era of growth and innovation.
Future Outlook
The fate of Tesla’s next headquarters is uncertain. For now, the only thing that is clear is that both California and Texas are courting Musk and his businesses ardently. At the end of the day, Musk alone holds the key to a settlement in this battle. His decision will not only affect economic and environmental landscapes for years to come but also shape future policy and public opinion in the two states.
The future of electric vehicles and renewable energy also rests on this move. If Tesla relocates to Texas, it would represent an enormous success for the Lone Star State and its efforts to foster the development of renewable energy. Conversely, a California stay would guarantee jobs and innovative initiatives to the Golden State in the face of a hostile federal climate.
When Musk makes his decision, not only will the two states have their own individual outcomes, but the entire nation also stands to gain. Musk’s presence in either state could be a major force in the tech industry and a potent influence over the nation’s economic future.
