IssuesStatewide NewsTexas Leaders Court Elon Musk After Potential Tesla Move Announced

As Elon Musk quarrels with California health officials over the lockdown, some Texas leaders are encouraging him to move Tesla to the Lone Star state.
May 13, 2020
https://thetexan.news/wp-content/uploads/2020/05/Elon-Musk-Tesla-1280x853.jpg

After Elon Musk tweeted a suggestion that he might move the Tesla headquarters from California to Texas, political leaders across the state opened their arms wide to the notion, offering up suggestions for possible locations.

Musk, who has been one of the most prominent critics of the nation-wide lockdown, has been in a feud with the health official of Alameda County in California, where the car manufacturer’s factory is located.

Despite slightly more lenient orders from California’s governor, the Alameda official has refused to allow Musk’s employees to return to the assembly line.

Tesla filed a lawsuit against the county on Saturday and Musk defied the official’s orders by reopening the factory on Tuesday.

Alongside the lawsuit announcement, Musk tweeted that “this is the final straw.”

The Texan Mug

“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 [dependent] on how Tesla is treated in the future. Tesla is the last carmaker left in CA,” said Musk.

Statewide leaders were excited at the possibility of Musk moving his company to Texas.

“Elon Musk could save billions in taxes if Tesla moves its headquarters to Nevada or Texas. Just saying,” wrote Governor Greg Abbott.

According to Reuters, Abbott said that he had spoken with Musk about the possibility of moving to Texas and his frustrations with the government in California.

“Come to Texas!” said Sen. Ted Cruz. “We would welcome Tesla HQ in Texas. We love jobs & Texans very much want to open up & get back to work (while still staying safe & following sound science). We make lots of cars & trucks in Texas, and we’d love more!!”

Local leaders in the state have also reached out a hand to Musk, asking him to consider their regions as a possible location for a new headquarters.

Hidalgo County Judge Richard Cortez sent a letter to Musk noting that the Rio Grande Valley has “a community of manufacturing facilities called maquiladoras that operates on both sides of the U.S.-Mexico border, based in Hidalgo County, which caters to automobile manufacturing operations in Monterrey, Mexico.”

“All that is necessary is for you to pick out a location on which to build your manufacturing plants, something that I am happy to help you choose,” wrote Cortez.

Musk responded in a tweet, saying, “Note is much appreciated.”

Dallas Mayor Eric Johnson, State Sen. Bryan Hughes (R-Mineola), Fort Bend County Judge KP George, and Rep. Pete Olson (R-TX-22) all also expressed interest in seeing Musk move Tesla’s headquarters or manufacturing facilities to their respective regions of the state.

The Dallas Morning News editorial board took opposition to the possibility in a headline reading “Texas would love to have Tesla, but not like this.”

In the opinion piece, the editors criticized Musk for his reaction to the Alameda health official in “threaten[ing] to sue the county and move Tesla.”

“That is a very serious threat to the economic well-being of the county and the people who live there,” said the editors.

Chuck DeVore, the Vice President of National Initiatives at the Texas Public Policy Foundation and a former Californian state legislator who moved to Texas, spoke out in favor of Tesla relocating to the Lone Star state.

“With California’s higher taxes, greater red tape compliance costs, higher labor and land costs, and more litigious environment, business analysts estimate that companies can save 32 percent of their operating costs by moving out of California to states such as Texas,” said DeVore. “As a former Californian myself, I say — along with Sen. Ted Cruz — ‘welcome to Texas!’”

However, some have pointed out a notable obstacle Tesla already faces in the state — their model of direct sales to customers is prohibited by Texas law.

Instead of using a dealership model like most other vehicle manufacturers, Tesla sells cars directly to customers with their own stores.

In Texas, there are no Tesla “dealerships” where you can purchase their vehicles. Rather, the company has set up “galleries” where you can see models and talk to employees about the vehicle.

However, employees at the galleries are prohibited from discussing sales with customers, who must make the purchase online or in another state.

Legislators and Tesla lobbyists attempted to have the regulation repealed in past legislative sessions, but their efforts were opposed by the dealership lobby, other car manufacturers, and many elected officials.

Whether that regulation would deter the company from moving to Texas or not remains to be seen.

However, this isn’t the first time that Tesla has expressed interest in coming to Texas.

In February, Musk tweeted a poll asking “Giga Texas?” — a reference to Tesla’s “gigafactories.”

80 percent of the 300,000 respondents were in favor of the notion.

In March, Musk said that he was scouting locations for a new factory to produce the Tesla Cybertruck, and that it would be located in “central USA.”

While Reuters reported that “there was not yet any discussion of incentives to entice Tesla away from California” according to the governor’s office, an “incentive” from the taxpayer-funded Texas Enterprise Fund (TEF) to bring thousands of jobs to the state is highly possible. 

Musk’s other well-known company, SpaceX, was offered a $2.3 million grant from the TEF.

SpaceX has also received millions more in funding from the state, albeit somewhat more indirectly, through Texas’ Spaceport Trust Fund (STF).

The STF provides money to “spaceport development corporations,” which must secure a “viable business entity” that “is capable of launching and landing a reusable launch vehicle or spacecraft and intends to locate its facilities at the development corporation’s planned spaceport in the state.”

$13 million was awarded to a corporation in Cameron County — home of SpaceX’s Boca Chica launch site — and $5 million was awarded to a corporation in McClennan County — home of a SpaceX testing facility.

While Tesla is extremely unlikely to see any money coming from the STF, Musk’s existing connections to Texas, pre-existing relationships with state officials, and potential financial incentives could play a role in his decision to move to Texas.

Disclosure: Unlike almost every other media outlet, The Texan is not beholden to any special interests, does not apply for any type of state or federal funding, and relies exclusively on its readers for financial support. If you’d like to become one of the people we’re financially accountable to, click here to subscribe.

Get “KB's Hot Take”

A free bi-weekly commentary on current events by Konni Burton.

Daniel Friend

Daniel Friend

Daniel Friend is a reporter for The Texan. While recently finishing his degree in Political Science from Azusa Pacific University, he also interned in the U.S. Senate and co-authored a book on C. S. Lewis’s science fiction trilogy. In his spare time, he might be reading up on Dostoevsky or attempting to write a novel.