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Tesla Moving Its Headquarters to Texas, a State Where it Cannot Sell its Vehicles Directly to Customers

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【Summary】The CEO officially confirmed that the electric automaker would be moving its headquarters to Austin, Texas, but state laws prohibit the brand from selling vehicles in the state.

Original Vineeth Joel Patel    Oct 09, 2021 7:30 AM PT
Tesla Moving Its Headquarters to Texas, a State Where it Cannot Sell its Vehicles Directly to Customers
Tesla's massive factory outside of Austin, Texas is currently under construction.

While the majority of companies are looking to leave Texas because of political reasons, Tesla CEO Elon Musk announced that the electric automaker would relocate its headquarters to Austin, Texas from Palo Alto, California. Musk announced the news during Tesla's annual shareholder event. The move is one that Tesla has been discussing for a long time now, but is finally putting into action. In Musk's words, the move is being made because of housing affordability and long commute times.

Goodbye California, Hello Texas

"Our factory is like five minutes from the airport, 15 minutes from downtown, and we're going to create an ecological paradise here because we're out on the Colorado River," said Musk. "It's going to be great."

Despite Musk's move to set up shop in Austin, the automaker still has plans to expand its actives in California. Production at its Fremont factory will be boosted by 50 percent. Tesla makes a lot of sense for Tesla, as the company recently began developing a Tesla gigafactory in the state in 2020. The state is also home to one of the locations for SpaceX, which is another one of Musk's companies. So, the move makes plenty of sense.

The decision to go from California to Texas also comes after a few run-ins between the state and electric car company. Last year, officials in Alameda County, California forced Tesla to shut down its factory in Fremont, California over safety corners for the brand's workers. Musk went on to ignore the order and reopened the factory while simultaneously downplaying the COVID-19 pandemic. The CEO took to Twitter to announce that Tesla would be using the county. Things had gone sour between the two.

One Big Downside

While Texas will certainly be a good place for Musk, as the state has no personal income tax, it's going to be a problem state for consumers. The state has some auto dealer franchise laws in place that don't allow Tesla to sell vehicles to consumers in Texas. Other automakers have to sell their vehicles to independently owned third-park businesses, or dealerships, that can then sell vehicles to shoppers. Since Tesla sells cars directly to consumers, it's in a bind in the state. The Legislature that would be able to change the law last met on May 31, 2021 and won't meet again until 2023. So, Texans will continue to have to jump through loopholes to buy an electric car from the automaker.

California has been a kind place for Tesla through the years. Tesla set up shop in the state in 2003. The state gave the electric automaker tax breaks, grant funding, favorable policies from government organizations, and many incentives. We're interested to see what Texas brought to the table for Tesla to make the move.

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