The richest man in the world, Elon Musk, has it clear. For him, “Austin, Texas, will be the biggest boomtown the U.S. has seen in 50 years.”
Musk called Austin a “mini California” in a conversation on Joe Rogan’s podcast.
The billionaire packed his bags and left California to move to Austin last December. It’s no secret to anyone that Musk is completely fed up with the Golden State for its high tax burdens, draconian health measures to deal with the virus, economic regulations and the authorities’ treatment of entrepreneurs.
The trigger for leaving California was a fight with health authorities who would not allow him to open his Tesla car factory in Fremont because of restrictions against the coronavirus. Elon Musk even went so far as to say that the radical health measures were “Fascist.”
“Tesla will now move its HQ and future programs to Texas/Nevada immediately,” the Tesla CEO tweeted in May after another run-in with local authorities.
Governor Gavin Newson, at the beginning of the pandemic, was praised for his way of dealing with the virus -like most of the administrations that opted to close the economy, but then, as a result of the deepening economic crisis that generated devastating job losses and business bankruptcies, without managing to control the virus, California is one of the states most affected in terms of contagions and deaths, and so criticism has directed towards the local authorities themselves.
In this sense, one of the big problems for California during all this time is not only the health and economic crisis, but also the flight of large capital – such as that of Tesla – which is going to Republican states such as Texas. A similar case to what is happening in New York and Florida.
At the time, California Governor Gavin Newsom had downplayed the issue over Tesla’s departure, noting that he was “not concerned about Elon leaving soon” because, according to the governor, the state was committed to the automaker’s success.
But there was another statement regarding the billionaire’s departure for Texas: “We may not be the cheapest place to do business, but we are the best place to do business,” Mr. Newsom said, in a way of assuring that companies – like Tesla – would continue to invest in California and, moreover, would not leave. Big mistake.
Last summer, for example, Elon Musk chose Austin as the site for the $1 billion factory that would build Cybertruck, the automaker’s long-awaited electric pickup truck. Also, as mentioned, in December he confirmed rumors that he was relocating from Los Angeles to the Lone Star State.
The billionaire said Tesla chose Austin as the site for the electric carmaker’s next U.S. plant because “Austin is a little bit like a mini California.”
Tesla employees, Elon Musk, and other entrepreneurs, chose Austin
According to Musk’s words, the billionaire asked the Tesla team in California what their top choice for a new factory would be, and where they would like to live, and the “No. 1 choice was Austin.”
In other words, both Tesla employees and Elon Musk agreed that Austin was the ideal place to house the brand new car factory. And who knows how many other businesses.
In Texas, moreover, there are no state income taxes, which is an unequivocal incentive to bring in capital. Nonetheless, Musk threw out a comment as advice to the city of Austin regarding the change in dynamics that a large migration may bring (Texas is one of the top recipients of new capital and Californian citizens leaving the Golden State):
“I think we have to make sure that people moving here from California don’t inadvertently recreate the problems that made them move in the first place,” Musk commented during Thursday’s interview.
But Tesla wasn’t the only company to choose Austin for its business.
According to a Business Insider article, “A growing number of business leaders and companies have moved from traditional hubs like Silicon Valley to Texas as the pandemic has forced many people to work remotely.”
“Late last year, software giant Oracle said it would move its headquarters from California to Austin. The Information reported that Dropbox CEO Drew Houston would also move to the city, and Palantir co-founder Joe Lonsdale said he would also move his venture capital firm, 8VC, there,” the media outlet reported.
Last year, according to the Austin Chamber of Commerce, the relocation of businesses to the Texas capital could generate an estimated 10,000 jobs. That would be the city’s highest number on record in a single year.