Tesla Hasn't Been Entirely Truthful About Leaving California

Electric Vehicles / Comments

Here's what's really going on.

Tesla CEO Elon Musk first publicly expressed his frustration with the state of California well over a year ago when the coronavirus pandemic initially struck. He faced off against state health authorities who demanded Tesla's Fremont factory comply with lockdown and closure procedures. An agreement was ultimately reached but the experience, in part, convinced Musk the carmaker needed to move its headquarters out of state.

Last week, the CEO announced Tesla is moving its HQ from Palo Alto, California to Austin, Texas. The Fremont factory, home of the Tesla Model 3, will not close, however, as demand reminds higher than ever.

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But Reuters reports Tesla won't abandon Palo Alto entirely. An inside source claims Tesla has agreed to lease office space from Hewlett-Packard, Inc. The information and technology company's offices are already close to Tesla's. So far, Tesla has leased 325,000 square feet of space from HP. That's not exactly a couple of cubicles.

Musk's HQ announcement initially came across that he intended to leave California entirely, save for the Fremont plant. This is not true, assuming this report is accurate. Palo Alto may no longer be the place where Musk goes to work every day, but Silicon Valley is not being abandoned by Tesla's white-collar workforce.

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Yes, Austin is quickly becoming a technology company magnet because of a better business environment but there's still significant top-notch talent in Silicon Valley. It would be foolish for Tesla to ignore that. Musk was also thinking of his employees in his Texas decision.

Housing prices in Californian and Fremont especially are extremely high. Austin and its suburbs are far more affordable. There are currently 12,000 Tesla employees in the Bay Area, including 750 in Palo Alto. As for Fremont and the battery production facility in the neighboring state of Nevada, Musk is aiming to boost production by at least 50 percent in both locations.

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Source Credits: Reuters

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