Tesla Announces HQ Move to Austin

Current Tesla HQ within Stanford Research Park.

Tesla is moving its headquarters from Palo Alto, Calif., to Austin, CEO Elon Musk revealed yesterday during the company’s annual stockholders meeting.

The move might deal another blow to the San Francisco Bay Area’s recovering economy, as the list of tech companies moving out or downsizing their footprint continues to grow.

It is unclear how many of its office jobs Tesla will relocate to Texas. The exact location is yet unknown, but most likely the electric car manufacturer will take up space relatively near its 4 million-square-foot Giga Texas factory—currently one of the largest projects under development in the metro—at 12733 Harold Green Road in Austin.

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A timeline of the move was not provided, but Musk clarified that this does not mean Tesla is completely moving out of California. The company will continue to operate its factory in Fremont, where all Models X and S are made, and expects to “increase output by 50 percent.” However, the CEO noted that housing costs and other constraints place a hard cap on growth. “There’s a limit to how big you can scale in the Bay Area,” he said.

Tesla first moved into the 350,000-square-foot building within Stanford Research Park 11 years ago. The office—located at 3500 Deer Creek Road—eventually grew to house 650 employees. In 2018, Tesla expanded its footprint, leasing office space in two other buildings, this time across the Bay, in Fremont, at 6800 and 6900 Dumbarton Circle, in an office park owned by Peery Arrillaga. Some 1,500 employees were moved to this new location, The Mercury News reported at the time.

Tesla’s 4.8 million-square-foot factory in Fremont

The Tesla Fremont Factory initially opened in 1962 as the General Motors Fremont Assembly. The EV manufacturer acquired the property in 2010 for $42 million, CommercialEdge data shows. The 12-building, 4.8 million-square-foot factory houses approximately 10,000 Tesla employees (as of June 2018).

Also in Fremont, Tesla operates a pilot battery plant—located about a mile from its car factory, at 48370 Kato Road—which produces 4680-type batteries. In the same meeting, Musk noted that it has a potential production capacity of 10 gigawatt hours per year, further explaining that this would provide enough cells for the Giga Texas factory to scale up production of vehicles once it becomes operational.

Tech company relocations from California continued this year. In January, data center giant Digital Realty announced its move to Texas. In May, Oracle closed on the $155 million sale of its San Jose headquarters to PIMCO and Lane Partners. In markets such as the Bay Area, the tech relocation phenomenon is counterbalanced, in part at least, by a substantial growth in the life science sector, while tech-leased assets continue to attract large sums—such as KKR’s $535 million acquisition of a Micron Technology-leased campus in August.