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Tesla to move headquarters from Palo Alto to Texas; Fremont factory to 'increase output'

CEO cites high housing costs, long commutes and limitations in growth

Elon Musk, CEO of Tesla, addresses shareholders in an annual meeting held on Oct. 7, 2021, in Austin, Texas, and broadcast over Zoom. Zoom screenshot courtesy Tesla.

UPDATE: On Oct. 8, the Registry real-estate news site reported that Tesla has agreed to lease 325,000 square feet of a site that formerly housed HP's headquarters, at 1501 Page Mill Road, in Palo Alto. This space will not be used as Tesla's HQ, however.

Tesla Inc., the electric vehicle and energy storage company, is moving its Palo Alto-based headquarters to Austin, Texas, the company's CEO Elon Musk said Thursday afternoon.

The announcement came during an annual shareholder meeting hosted from inside one of Tesla's Gigafactories also located in Austin.

Musk gave vague explanations for the move, but cited high housing costs and long commute for workers as well as growth limitations imposed by being in the Bay Area.

"It's tough for people to afford houses and a lot of people have to come in from far away. … There's a limit to how big you can scale in the Bay Area," he said.

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But this is not the end for Tesla's story in California. Musk added that the company will "increase output" from its Fremont and Nevada factories by 50%.

"This is not a matter of Tesla sort of leaving California," he said.

Tesla will be moving its headquarters from Palo Alto to Texas, CEO Elon Musk announced on Oct. 7, 2021. Photo by Steve Jurvetson courtesy Wikimedia Commons.

Propping up the benefits of the new location, Musk said the new headquarters will be five minutes from the airport and 15 minutes from downtown. And while the company will continue to grow in California, Tesla will expand "even more so" in Texas.

Tesla, a company that has grown exponentially since it was founded in 2003 and set the standard for electric vehicles, first arrived to Palo Alto in 2009, moving from San Carlos into a 350,000-square-foot building in Stanford Research Park.

The company's former chief technical officer and co-founder J.B. Straubel said one large incentive to come to Palo Alto was the city's proximity to Stanford University. (Straubel is also a Stanford alumnus.)

Palo Alto City Manager Ed Shikada expressed disappointment in the news, noting, "Tesla has been a member of the Palo Alto community for over a decade."

But, he said in an email to this news organization, "This change reflects the innovative cycle and nature of Silicon Valley, where we are seeing highly mobile companies in our region evolve. We look forward to continuing to adapt to the economic forces at play.”

Musk recently became an increasingly vocal critic against the golden state and Silicon Valley. In an interview during The Wall Street Journal's annual CEO Council summit, the Tesla CEO revealed that he moved out of California as it had become "complacent" in its leading economic status. He also suggested that Silicon Valley had become increasingly irrelevant.

"I think we’ll see some reduction in the influence of Silicon Valley,” he said in the interview.

Tesla is not the first company to make an exit out of Palo Alto during the pandemic.

In August, Palantir Technologies quietly moved out of its Palo Alto headquarters at 100 Hamilton Ave. to Denver, Colorado. The company's CEO Alex Karp previously expressed frustrations with Silicon Valley's "increasing intolerance and monoculture."

Hewlett Packard Enterprise also announced in December that it will move from Palo Alto to Houston. HP Inc., Hewlett Packard's consumer product arm, remains headquartered in the city.

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Tesla to move headquarters from Palo Alto to Texas; Fremont factory to 'increase output'

CEO cites high housing costs, long commutes and limitations in growth

by / Palo Alto Weekly

Uploaded: Sun, Oct 10, 2021, 6:37 pm

UPDATE: On Oct. 8, the Registry real-estate news site reported that Tesla has agreed to lease 325,000 square feet of a site that formerly housed HP's headquarters, at 1501 Page Mill Road, in Palo Alto. This space will not be used as Tesla's HQ, however.

Tesla Inc., the electric vehicle and energy storage company, is moving its Palo Alto-based headquarters to Austin, Texas, the company's CEO Elon Musk said Thursday afternoon.

The announcement came during an annual shareholder meeting hosted from inside one of Tesla's Gigafactories also located in Austin.

Musk gave vague explanations for the move, but cited high housing costs and long commute for workers as well as growth limitations imposed by being in the Bay Area.

"It's tough for people to afford houses and a lot of people have to come in from far away. … There's a limit to how big you can scale in the Bay Area," he said.

But this is not the end for Tesla's story in California. Musk added that the company will "increase output" from its Fremont and Nevada factories by 50%.

"This is not a matter of Tesla sort of leaving California," he said.

Propping up the benefits of the new location, Musk said the new headquarters will be five minutes from the airport and 15 minutes from downtown. And while the company will continue to grow in California, Tesla will expand "even more so" in Texas.

Tesla, a company that has grown exponentially since it was founded in 2003 and set the standard for electric vehicles, first arrived to Palo Alto in 2009, moving from San Carlos into a 350,000-square-foot building in Stanford Research Park.

The company's former chief technical officer and co-founder J.B. Straubel said one large incentive to come to Palo Alto was the city's proximity to Stanford University. (Straubel is also a Stanford alumnus.)

Palo Alto City Manager Ed Shikada expressed disappointment in the news, noting, "Tesla has been a member of the Palo Alto community for over a decade."

But, he said in an email to this news organization, "This change reflects the innovative cycle and nature of Silicon Valley, where we are seeing highly mobile companies in our region evolve. We look forward to continuing to adapt to the economic forces at play.”

Musk recently became an increasingly vocal critic against the golden state and Silicon Valley. In an interview during The Wall Street Journal's annual CEO Council summit, the Tesla CEO revealed that he moved out of California as it had become "complacent" in its leading economic status. He also suggested that Silicon Valley had become increasingly irrelevant.

"I think we’ll see some reduction in the influence of Silicon Valley,” he said in the interview.

Tesla is not the first company to make an exit out of Palo Alto during the pandemic.

In August, Palantir Technologies quietly moved out of its Palo Alto headquarters at 100 Hamilton Ave. to Denver, Colorado. The company's CEO Alex Karp previously expressed frustrations with Silicon Valley's "increasing intolerance and monoculture."

Hewlett Packard Enterprise also announced in December that it will move from Palo Alto to Houston. HP Inc., Hewlett Packard's consumer product arm, remains headquartered in the city.

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