Elon Musk has confirmed a previously rumored move from California to Texas, citing his concerns over California’s decision to shut down most businesses and issue a stay-at-home order as part of its response to the COVID-19 pandemic. He says that California has failed to truly appreciate its innovators such as those residing in Silicon Valley.
His move may be part of a wave of technology sector entrepreneurs who have long complained of high taxes and a high cost of living in California, especially in the big cities. Hewlett-Packard has also recently announced a move from its founding home in Silicon Valley to Texas as part of its drive to lower its operating costs.
Texas especially has lower taxes on individuals, which may be attractive to a fellow like Elon Musk, who recently became the second wealthiest individual on Earth. Palantir Technologies co-founder Joe Lonsdale cited that as a reason for his own move to Austin in an opinion piece for the Wall Street Journal and also questioned whether Silicon Valley would remain a tech leader for long, considering California’s increasing unfriendliness toward its businesses:
“The harsh truth is that California has fallen into disrepair. Bad policies discourage business and innovation, stifle opportunity and make life in major cities ugly and unpleasant. … But now a state like Texas provides these opportunities without the problems and baggage California has accumulated.”
The COVID-19 shutdown may have been the final straw for some of California’s high-powered expatriates, as tech sector professionals often come to Silicon Valley to network with like-minded, technologically literate entrepreneurs and find potential partners for a venture. Although there are some successful digital networking apps, it’s still hard to beat face-to-face meetings at venues where tech professionals like to have a cup of coffee and chat with their peers. Some tech sector startups such as DoorDash that may be on their way to becoming unicorns have not wanted to leave Silicon Valley despite issues like income taxes that can be as high as 13.3%, burdensome regulations that seem to favor Fortune 500 companies, and a high cost of living, possibly due to the potential for meetups with angel investors who are especially interested in innovative new companies.
Elon Musk has fought with California’s state- and county-level officials over its response to the pandemic for much of 2020, most notably filing a lawsuit against Alameda County and threatening to move his factory out of Alameda County due to forced closures. That the move would have cost Alameda County upward of 10,000 jobs may have been a factor in California’s decision to rule that the Gigafactory was an “essential business” while formulating its current response to the pandemic.
However, this was apparently not enough for Musk. He calls the new stay-at-home order an “unconstitutional” form of mass house arrest that presumes that those impacted by the order have been infected with the coronavirus even without a positive test. In recent comments, he compared California to a sports team that had won championships for several years in a row: “They do tend to get a little complacent, a little entitled, and then they don’t win the championship anymore.”
Elon Musk has also criticized the fast version of the test after receiving mixed results when he was tested for the coronavirus himself after reportedly experienced minor symptoms of COVID-19.
Musk’s move to Texas may also be partially sparked by progress on the construction of the new Gigafactory he has in the state, but is unlikely to be the only or even a major factor in his decision, considering that Tesla has recently replaced the manager of the Gigafactory under construction in Germany due to possible management issues like a temporary suspension of its water due to an unpaid water bill and Musk has shown little, if any, interest in anything more than brief visits to the country. His move to Texas is more likely to have been sparked by California’s increasingly unfriendly attitude toward tech sector businesses like Tesla.