Tech giant and Tesla founder Elon Musk has packed up his things and moved. After calling California home for over 25 years, the inventor and billionaire is now calling Texas home. Musk also moved to cash in on some of the impressive gains in Tesla stock this week, as the company announced it will be selling $5 billion in shares.
Although Silicon Valley in California is known as the cradle of the tech industry, Musk has decided to walk away from the scene. Tesla and Space-X, Musk’s successful tech companies, both have operations in Texas, and Musk recently filed paperwork to move his foundation as well.
But it’s not an amicable separation, and Musk has some harsh words for his former home state. Musk spoke with the Wall Street Journal during the annual CEO Council summit. Per People, “‘If a team has been winning for too long, they do tend to get a little complacent, a little entitled and then they don’t win the championship anymore. California has been winning for too long,’ Musk, 49, said at the summit, according to CNBC. ‘And I think they’re taking them for granted a little bit.’”
The final straw may have come when pandemic lockdowns forced Musk to shut down his Tesla factory in Alameda County. People reports, “Tesla is filing a lawsuit against Alameda County immediately. The unelected & ignorant ‘Interim Health Officer’ of Alameda is acting contrary to the Governor, the President, our Constitutional freedoms & just plain common sense!’ he wrote on Twitter.
‘Frankly, this is the final straw,’ he added in a follow-up tweet. ‘Tesla will now move its HQ and future programs to Texas/Nevada immediately. If we even retain Fremont manufacturing activity at all, it will be dependen[t] on how Tesla is treated in the future. Tesla is the last carmaker left in CA.’
The WSJ reported that Musk reopened the plant in spite of local shelter-in-place orders and dared authorities to arrest him, though they did not.”
Musk claims to be looking to break up the monolithic influence San Francisco has over the tech industry. Per People, “‘First of all, Tesla and SpaceX obviously have massive operations in California. In fact, it’s worth noting that Tesla is the last car company still manufacturing cars in California. SpaceX is the last aerospace company still doing significant manufacturing in California,’ he said, according to CNBC. ‘So. There used to be over a dozen car plants in California. And California used to be the center of aerospace manufacturing! My companies are the last two left…That’s a very important point to make.’
‘For myself, yes, I have moved to Texas,’ he added.”
Tesla Stocks are Way, Way Up
Although Tesla is not in dire need of money, the company does have a number of huge projects ahead. Upcoming expenses include two new factories and a drive to bring a Tesla pickup truck and semi-tractor to the market. As a result of these upcoming expenses and looking to turn stock gains into cash money, Tesla announced their intent to sell $5 billion worth of shares at market value.
It has been a fantastic year for Tesla. Shares have jumped a whopping 677% this year. CNN Business reports, “the stock sale appears to be an effort to turn paper gains into real money, given that the company’s valuation topped $600 billion for the first time this week. (Here’s your reminder that Tesla trades at almost 1,290 times trailing earnings. Toyota and Volkswagen, which produce far more vehicles, are trading at roughly 15 and 18 times earnings, respectively.)
‘We believe this is the smart move at the right time for Musk & Co. after the parabolic rally in shares with the appetite strong among investors,’ Wedbush Securities analyst Daniel Ives said in a note to clients.”
Did Musk Build Silicon Valley Just to Abandon It?
Although Tesla and Space-X are far from the only tech start-ups to grow to mammoth proportions in the comforting arms of Silicon Valley’s tech bubble, they are arguably two of the most successful. Some feel that Musk was instrumental in creating Silicon Valley’s excessive influence over world tech, and then abandoning it at it’s height. This is a valid accusation, as Musk himself has been one of the greatest movers and shakers in the industry.
However, it cannot be argued that Musk is not shrewd. By moving to Texas, Musk avoids California’s 13.1% state income tax for earners over $1 million a year. Texas also doesn’t collect taxes on capital gains, which provide a bulk of Musk’s profits.
Whether another tech giant will rise to fill the void left behind by Musk’s abandonment of the area, or businesses will follow his lead and head west, remains to be seen.