Investing.com – Tesla Motors stock traded 0.7% lower in Friday’s premarket as the market absorbed CEO Elon Musk’s decision to move the company’s headquarters to Texas from California.
The company plans to maintain a significant presence in California and even increase output at its Fremont factory there.
Tesla even held its 2021 annual meeting of stockholders at its Gigafactory in Austin, Texas’s capital, on Thursday. The management advanced two main reasons for the move. One was the limited scope for expansion at the Fremont factory, the other being the high cost of living in California and the long distances that employees were forced to travel.
The company had numerous run-ins with state regulators last year as it tried to keep the Fremont factory open in defiance of state decrees on social distancing. Musk, who has personally already relocated to Texas, called the state's health orders 'fascist' on an earnings call at the time.
The electric vehicle maker thus joins a growing a list of companies which have moved out of California. Oracle (NYSE:ORCL), HPE and Toyota are among them.
According to StreetInsider, Wedbush’s Dan Ives believes the move is Tesla's first step towards making Austin its domestic and global hub.
Texas has been a key beneficiary of the move out of California.
“The Lone Star State is the land of opportunity and innovation,” Texas Governor Greg Abbott tweeted, welcoming Musk and his company.