Elon Musk and Tesla’s New Home in Austin Texas
Musk announced at the company’s shareholder meeting on Thursday at Tesla’s vehicle assembly plant in Austin which is still under construction. It is being named GigaFactory 5 with a potential production capacity of up to 600,000 units. It has other factories in Berlin, Shanghai and Fresno.
This will likely give a huge boost for Austin Texas housing market. And there’s no doubt Dallas, Houston and San Antonio housing markets will benefit as well. See the predictions for the Dallas housing market, Houston housing market, and the San Antonio housing market.
Why Move to Austin?
What drove Musk to make the move to the Lone Star State can only be speculated on, yet it it’s likely the high taxes, high cost of doing business, and excessive regulations in California that forced the decision. Musk mentioned the high cost of housing in California and lack of availability of living space which can limit the company’s access to talent. California itself competes better by outsourcing to other states and countries. Tesla is investing in the China economy with big hopes of sales in China, another socialist regulatory regime.
It’s one more example of how the crushed California housing market is crippling the California economy and making US companies less competitive. These types of interstate moves are very good for the housing market and for lifting the economy.
How much money will Tesla save in moving more completely to Texas? Difficult to say but it might be substantial. If the cost and issues in California become too intense, it’s not a reach that they would have to shift production elsewhere. Although Tesla is selling so many vehicles right now, they will need all the production they can get.
Texas is the New California
With rapid tech growth in Austin in particular and the booming oil industry, it’s hard for any company to ignore the possibility of doing what Tesla has.
Austin Mayor Steve Adler said: “We welcome Tesla home! It’s a tech company that creates the clean manufacturing, middle-skill jobs Austin needs. We’re one of the safest big cities, with a strong innovative, entrepreneurial, environmentally focused culture and Tesla fits right in. Tesla is now an even larger part of a community that works together to meet our challenges and to enjoy a magical city”
Governor Greg Abbott also welcomed the good news about Tesla.
The Lone Star State is the land of opportunity and innovation.
— Greg Abbott (@GregAbbott_TX) October 7, 2021
Tesla’s Stock Price Rises
Tesla’s stock jumped almost $20 in late afternoon after slowly receding towards the end of the trading day to about $780.
See more on the Tesla stock forecast. The move today will open up a lot more speculation and predictions about where Tesla might go with respect to their business. Musk doesn’t intend to sit still and suffer. Tesla still has operations in California so it’s not completely abandoning the state.
“We will be continuing to expand our activities in California. Our intention is to increase output from Fremont and Giga Nevada by 50%. If you go to our Fremont factory it’s jammed.” Musk said during the meeting.
Musk could also be motivated by his own creative executive compensation package that could generate huge stock awards if Tesla achieves specific market cap increases and sales goals. He owns options set to expire in 2021, and they could be worth more than $20 billion.
Texas has no personal income tax although tax is applied to real estate. The Texas Economic Development agency is said to provide generous tax breaks to bring in new companies. Texas is known to be business and employer friendly.
Learn more about what’s driving the TSLA stock price.
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