STORY: Elon Musk announced plans on Wednesday to make California Tesla's global engineering home.

It's a bit of a turnaround for the billionaire, who has previously criticized the U.S. state for: "overregulation, overlitigation, overtaxation."

He also moved Tesla's official corporate headquarters to Texas in 2021.

The two states are political and business rivals.

While California has more electric vehicles and provided Tesla with tax incentives as it grew, Texas is known for relatively light regulation and is the heart of the nation's oil-and-gas industry.

Musk had California Governor, Gavin Newsom, by his side when he announced Wednesday's news.

During the event, Newsom bragged that his state was the biggest manufacturing center in the nation.

"Eat your heart out, Germany," he joked.

The announcement comes not long after Tesla said it would focus battery cell production in the U.S., pausing plans to produce entire batteries in Gemany, in light of federal incentives in the Inflation Reduction Act.

Tesla is one of the first companies to declare such a strategy shift prompted by the legislation.