Tesla Sets Up California Base in Walk Back From Musk’s Bashing

Dana Hull and Karen Breslau
·3 min read
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(Bloomberg) -- Tesla Inc. will set up its global engineering headquarters in California in a sign of renewed cooperation between the electric-vehicle company and the EV-friendly state that Elon Musk scorned the last several years.

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The carmaker is moving into the former headquarters of HP Inc. in Palo Alto, Musk announced alongside California Governor Gavin Newsom. Tesla expects 1,400 employees to work at the Hanover Street location, according to the city. The company has hundreds of Palo Alto engineering job openings listed on its website.

The joint announcement suggests a thaw in frosty relations between Musk and California after he moved Tesla’s corporate headquarters out of Palo Alto to Austin, Texas, in 2021. While the company continued to grow its large footprint in the state — Tesla now has more than 47,000 employees there — Musk panned California as having gone from a land of opportunity to a place with too much regulation, litigation and taxation.

“The world we invented is now competing against us, and you can’t rest on your laurels,” Newsom said in remarks live-streamed by Tesla’s Twitter account. He said California has been committed to Tesla and supported the company through policies set up by the state’s powerful Air Resources Board.

When Musk announced that he personally had moved to Texas in December 2020, he said California had become complacent and taken its success for granted. When Tesla followed suit 10 months later, he cited limits to how much the company could expand in the San Francisco Bay area.

Read more: How Lockdowns Strained Relations Between California and Musk

Tesla’s chief executive officer was cordial with Newsom on Wednesday, thanking him for being one of the first to put down a $100,000 deposit for the Roadster model the company produced starting in 2008.

“It’s a point of pride — always has been, for me — that Tesla is a California company,” Newsom said.

While the California governor tangles routinely with conservatives on divisive political topics, he has been careful not to insult Musk. When Tesla moved its headquarters to Texas, Newsom said he had “reverence and deep respect” for the CEO.

California’s leader also has long argued that Tesla was able to become the largest passenger EV maker in the world because of the state’s embrace of EVs. Newsom lauds California as an economic powerhouse that outperforms red states including Florida and Texas in terms of jobs, productivity, wealth and innovation, while also serving as a bastion of tolerance and progressive social policies.

Related: California Helped Create Tesla, Governor Says After Losing HQ

Standing next to Musk, Newsom highlighted his own background as an entrepreneur who had his share of frustrations with California’s regulations and bureaucracy. Before Newsom was elected mayor of San Francisco in 2003, he operated wineries and restaurants under the PlumpJack label.

Newsom joked with Musk that he could better afford the down payment on his first Tesla when he was in the private sector. As governor, his salary is $209,747, considerably less than he made as a business owner.

“Now I have a pension,” Newsom told Musk, who is the second-richest person in the world, according to the Bloomberg Billionaires Index. “So eat your heart out.”

--With assistance from Sean O'Kane.

(Updates with Musk’s past criticism of California starting in the third paragraph.)

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