Why Elon Musk Is Moving SpaceX HQ from California to Texas

SpaceX founder Elon Musk said on Tuesday that the aerospace company and X (ex-Twitter) will move their headquarters from California to Texas. According to Musk, a new law signed by California Governor Gavin Newsom was the final straw that led to this decision. However, the decision has been long in the making.

The final straw

The newly approved legislation, known as the “Support Academic Futures and Educators for Today’s Youth Act,” or the “SAFETY Act,” will take effect on Jan. 1, 2025.

It is the first such state law in the US to prohibit schools from creating policies requiring staff to notify parents of a child’s gender identity. It was passed after more than a dozen conservative-led California school boards last year introduced a policy requiring parents to be notified if their children use a different name or pronoun at school than what is on their birth certificate.

‘The Governor of California just signed a bill causing a massive destruction of parental rights and putting children at risk of irreversible damage,’ Musk wrote on X.

He later added: ‘About a year ago, I made it clear to Governor Newsom that laws like this would force families and businesses to leave California to protect their children.’

Musk, 53, is the father of 12 children by three different women and has been an outspoken critic of California’s policies on the issue. Musk’s children include a transgender daughter who has cut off all communication with him due to political differences between them.

Escape to a friendly jurisdiction

The public documents on the change of incorporation that SpaceX filed with the Texas Secretary of State’s office in February confirm that the decision to relocate was not spontaneous. In addition to frustration with public school policies in California, Elon Musk had other reasons for deciding to relocate.

One is the government’s overall behaviour, which has repeatedly annoyed Musk. For example, he called the quarantine restrictions that shut down the Tesla plant in Fremont, California, ‘fascist.’ He also criticised the state for slow innovation and delaying civic improvement projects due to over-regulation.

Lawsuits filed at the state level against the company have also caused many problems. Earlier this month, eight former engineers filed a lawsuit alleging that Musk often engaged in ‘sexual harassment and retaliation.’ Earlier in 2024, Musk moved Tesla’s headquarters from Delaware to Texas after a state judge ruled against him.

X’s headquarters will also move to Austin from San Francisco, Musk wrote in a separate post. ‘Tired of dodging gangs of violent drug addicts just to get in and out of the building,’ Musk said, referring to X’s San Francisco headquarters. In an argument with local politicians, Musk said the city is in a ‘fatal loop.’

The headquarters move may start as symbolic but could have enormous implications for states like California if staff relocate, as their budgets depend on taxing high-end tech workers.

That said, Elon Musk is hesitant to leave California entirely, continuing to utilise Silicon Valley and its tech talent for his artificial intelligence and engineering efforts.

What makes Texas so special

It’s no secret that Musk is partial to Texas and is famous in the state. His business decision to relocate has many personal and professional benefits. 

Texas has no income or capital gains tax, making it an attractive place to live for high-earners like Musk and some of his employees. Fewer state regulations regarding headquarters and company incorporation may also appeal to him. Finally, having all his significant companies in one state could make operating easier.

Texas Governor Greg Abbott quickly reacted to Musk’s announcement, saying, ‘This solidifies Texas’ status as a leader in space exploration.’

When Musk broke ground on Tesla’s lithium processing plant in Robstown, near Corpus Christi, in May 2023, Abbott didn’t skimp on the praise.

‘This is good not only for jobs but for the entire future of the state,’ Abbott said. ‘Texas wants to be self-sufficient, not dependent on any foreign hostile country for what we need. We need lithium for the phone you hold in your hand, the batteries in Tesla trucks, and other purposes.’

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Forbes estimates Musk’s fortune at around $254.4 billion, making him the wealthiest man in the world. He founded SpaceX in 2002 with money earned from the sale of PayPal.  The company now has about 13,000 employees.

SpaceX has its headquarters in Hawthorne, California, but over the past few years, the company has been building a large facility called Starbase, 23 miles outside of Brownsville in South Texas. The facility currently contains a landing pad, launch complex, launch control centre, and tracking station for SpaceX.

The company’s Hawthorne plant was the primary production and processing site for the Falcon 9 rocket and the larger and more powerful Falcon Heavy rocket.

SpaceX is also building a Hyperloop Plaza in Bastrop, which Musk envisions as a place for the company’s employees to work and live.