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Tesla Accelerates Electrical Car Business South by Southwest Trip

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© Reuters. FILE PHOTO: Elon Musk, CEO of Tesla Motor, speaks at the South by Southwest Interactive Festival in Austin, Texas March 9, 2013. REUTERS / Gerry Shih / File Photo

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By Tina Bellon and Hyunjoo Jin

AUSTIN, Texas (Reuters) – Tesla Inc's decision to relocate its headquarters from Palo Alto, California to Austin, Texas is accelerating the shift of jobs in the electric vehicle industry to southern and western US states that have lower taxes, less Offer regulations and fewer unions than the blue coastal states where most electric vehicles are sold.

Electric vehicle startups and established automakers have invested $ 24 billion in new factories in Texas, Arizona, Oklahoma, Tennessee, and Kentucky.

Announcement by CEO Elon Musk https://www.reuters.com/business/autos-transportation/tesla-moving-headquarters-austin-texas-says-ceo-musk-2021-10-07 during the annual meeting of the No. 1 EV – The manufacturer on Thursday puts an exclamation mark on the shift in the focus of the US auto industry – and also highlights the tensions that could arise as a result.

Competition between states for jobs in electric vehicles is intense and has a political dimension. In the democratically minded Blue States like California, there are many electric vehicle buyers and electric vehicle investors who have strong opinions on climate policy.

Many of the states getting EV jobs are politically conservative red states whose Republican governors both support the fossil fuel industry and welcome electric vehicle manufacturers and their jobs with subsidies and regulatory tightening.

“The Lone Star State is the land of opportunities and innovations. Welcome, ”Texas Governor Greg Abbott tweeted Thursday after Tesla (NASDAQ 🙂 announced its move.

Tesla, the world's most valuable automaker, is now faced with the challenge of capitalizing on the Texan business climate without alienating workers from the vibrant tech industry of the San Francisco Bay Area. It also needs to take into account the large base of Tesla vehicle customers in more politically liberal states like California and New York.

"Tesla does not want to invite criticism or attacks from public interest groups accusing them of looking for a major incentive package or of leaving California at a time when the state is in danger," said John Boyd, director of Boyd Company, a site selection firm .

California Governor Gavin Newsom, a Democrat, praised Musk on Friday for investing and creating jobs in California, including its SpaceX facility.

However, Newsom said the state has also offered Tesla hundreds of millions of dollars in tax subsidies. "Our regulatory environment helped start a company and grow that company."

UNION

Detroit automakers like Ford Motor (NYSE 🙂 Co have an analogous problem. Ford said last week it and South Korean battery partner SK Innovation would invest $ 11 billion https://www.reuters.com/article/ford-motor-electric-idCAKBN2GN299 to build a sprawling electric vehicle and battery assembly complex in Tennessee larger than the automaker's historic Rouge Complex in Dearborn, Michigan.

This complex and related new facility in Kentucky could create 11,000 jobs.

The United Auto Workers union was quick to urge Ford to ensure that these were union jobs. But union membership is optional in Tennessee and Kentucky, and workers from other automakers in those states have so far opposed the UAW's organizing efforts.

Musk had a public argument with California when regulators forced Tesla to cease production in the first few months of the 2020 COVID-19 pandemic. At some point, Musk threatened to move Tesla's headquarters and future programs out of the state.

Musk, one of the richest people in the world, said he moved to Texas last year and settled in his new home wearing western-style scarves and shirts. California has income tax rates of up to 13.3%, while Texas has no taxes on personal income.

However, California also accounted for about 15% of Tesla's global shipments in 2020.

On Thursday, Musk said the headquarters move wasn't about Tesla leaving California entirely, and said production at Tesla's Fremont assembly plant and Reno, Nevada battery factory will increase 50%. Employees at Tesla's Palo Alto offices expect engineers to stay in Silicon Valley, although some finance workers may move, a source said.

An uncomfortable problem for Texas officials and Tesla is that Texas law currently prohibits Tesla from selling vehicles directly to customers in the state.

Austin is the fastest growing metropolitan area in the United States, with its population growing by 30% to around 2.3 million between 2010 and 2020.

Like other large cities in Texas, Austin and surrounding Travis County, where the Tesla factory is located, are ruled by Democrats, which sets it apart from the majority of the conservative, less populated counties of Texas.

The Austin metropolitan area is a technology hub that is home to PC maker Dell Technologies (NYSE 🙂 Inc. and operations by major Silicon Valley companies such as Apple Inc (NASDAQ 🙂 and Alphabet's Google (NASDAQ 🙂 Inc. Enterprise software manufacturer Oracle Corp (NYSE 🙂 announced in December that it would move its headquarters to Austin.

The South Korean conglomerate Samsung Electronics (OTC 🙂 is also about to build a $ 17 billion semiconductor factory north of Austin.

Austin Democratic Mayor Steve Adler welcomed the decision, saying Tesla will "create the clean, middle-skilled jobs Austin needs".

Known for its quirky culture, Austin is also home to major music festivals like Austin City Limits and South by Southwest, which draw large crowds each year.

But the dramatic growth and influx of many well-paid Californians met resistance from some local residents. Reports of out-of-state buyers buying homes for cash at double the price frustrated many Austinites.

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