PALO ALTO - The Bay Area’s rocky marriage with Tesla is talking a different track. This, after shareholders learned the electric car manufacturer is moving its corporate headquarter from Palo Alto, to Austin, Texas.
"Wake-up call. Right, and I think that’s really what we should be looking at and we should take it that way," said Derrick Seaver, president & CEO of the San Jose Chamber of Commerce.
Tesla CEO Elon Musk says Austin will now fly his corporate flag. The reason is that Texas, with lots of land and fewer regulations, is ripe for this company’s brand of bullish expansion.
These factories will have sale production in them as well. so it’ll kind of be, raw materials in, cars out. So really big," said Musk.
Tesla is the latest, and possibly not the last, major company in part or in whole, to move from the Bay Area. Hewlett Packard Enterprise and Oracle have also moved their headquarters to Texas.
"Headquarters costs are clearly higher here than they are in lots of other places. So it’s a very sensible thing for him to be moving to texas. For their headquarters," said San Jose State University strategic management professor Dr. Robert Chapman Wood.
Wood said costs related to housing and regulations are the two biggest factors for companies pulling up stakes. And that’s too many hurdles for Tesla, which vies to be the largest car manufacturer in the world.
Tesla will maintain and expand production at its Fremont plant. And most workers will not have to relocate to texas. Gov. Gavin Newsom says Tesla’s corporate departure doesn’t dull the gleam of the Golden State.
"I’m proud of the fact that we have over a quarter of the nation’s unicorns being located and headquartered here in California. Those are the next teslas," Newsom said Friday, while making a stop in Oakland.
Experts argue while the governor makes a valid point, the departures do indicate Silicon Valley needs to operate differently in the days and years ahead..
"If these things are not taken as a wake-up call, ah, it could get worse. And we certainly don’t want to see that happen," said Seaver.