Elon Musk vs. California: What the Exit of X and SpaceX Means for the Golden State | Elon Musk

Elon Musk announced this week that he will move the headquarters of his companies X and SpaceX from California to Texas, marking the culmination of a long standoff between the volatile CEO and the state where his company got its start.

Just a year ago, Musk announced that he would not move X’s headquarters out of San Francisco – despite of He claimed the city was in a “vortex of destruction.” At the time, he wrote: “You never know who your real friends are until things go wrong. San Francisco, beautiful San Francisco, though others have deserted you, we will always be your friends.”

But now Musk has changed his stance, citing a new California law banning transgender notification requirements in schools as the reason for his departure in a series of angry tweets on Tuesday. “The Governor of California just signed a bill that will cause massive destruction of parental rights and put children at risk of permanent harm,” he wrote. saying The bill would “attack families and businesses.” He responded to another tweet about leaving California by saying “many will follow” and later said subscriber What appeared to be a heavily Photoshopped or AI-generated image of himself wearing a cowboy hat with the caption “Texas.”

Although the executive branch has long complained about doing business in California, statement In 2022, the Golden State is a land of “overtaxation, overregulation, and litigation,” and experts say the timing of the announcement suggests it’s more than just an economic choice. It comes just days after Musk announced his full support for Trump, saying he would donate $45 million a month to a super Pac supporting the former president.

“He’s making a political calculation,” said Sarah Krebs, a political analyst and professor of government at Cornell University. “If he had made this decision at another time, it would have been a different story. This is part of a larger message he’s trying to send about politics — and about his politics.”

Musk’s rocky relationship with California is well-known. The tech mogul launched SpaceX in 2002 in Hawthorne, a city in the Los Angeles metropolitan area, and has enjoyed a number of tax breaks and incentives over the years — including more than $3.2 billion in direct and indirect California subsidies and favorable market adjustments since 2009, according to statistics from Gov. Gavin Newsom’s office.

While the move is symbolic, it is likely to reignite the perennial debate about San Francisco’s “doom loop” — the idea that the city by the Bay is locked in an unstoppable decline. With its 800,000-square-foot headquarters on Market Street in downtown San Francisco, X was one of the last remaining companies with large facilities in the area. As of 2019, the 20 largest tech companies sectioned The amount of office space leased in downtown San Francisco has been cut in half, and earlier this month, Twitter began looking for subtenants for its offices.

San Francisco’s downtown area has been trying to reverse urban decline for nearly 15 years. X, formerly known as Twitter, took advantage of a tax break passed in 2011 to attract businesses to San Francisco’s mid-market area, which had long struggled economically. The law was repealed in 2019, and the departure of X’s headquarters could be another blow to the area — where 46% of offices And 40% of retail space Vacant. Other companies who left Or downsized its San Francisco offices since 2021 including Meta, Salesforce, Snap, Lyft, Block, Airbnb, and PayPal.

Experts say many of Musk’s employees and customers will inevitably remain in California, making the moves more symbolic than practical. Musk previously moved the headquarters of Tesla, his electric car company, from California to Texas in response to the Golden State’s coronavirus measures, which he called “fascist” and clashed with regulators over keeping his facilities open despite the pandemic. However, many of Tesla’s factories remain in California today, including one of its largest manufacturing sites — the gigafactory in Fremont, California.

“As long as these companies still have an economic presence in California, the state will continue to affect them,” says Eric Talley, a professor of corporate law at Columbia Law School. “If you wanted to completely isolate yourself from the state, you would not only need to move your headquarters, you would need to stop selling and stop manufacturing in California—and I doubt that would happen.”

The changes at SpaceX and X may be more pronounced for other tech companies, where Musk has been adamant about employees returning to in-person work. After acquiring X in 2022, Musk ordered nearly all of his employees to return to the office full-time, demanding that they be “extremely aggressive.” SpaceX, likewise, requires employees to work in-office.

Musk’s announcement and his targeting of Newsom on the X show sparked a back-and-forth between the CEO and the California governor, who tweeted “You’ve bent the knee” — implying that Musk was pledging allegiance to Trump. Musk responded by saying, “You’ll never get off your knee.”

Even if Musk changes his political mind, experts say, it will be hard to convince the majority of SpaceX and SpaceX employees to move from California, a liberal, tech-focused haven, to a red state like Texas. Moving the company’s headquarters is easy, Tully says. But moving its employees is not.

“It takes a lot of effort to flip a nice place with huge network benefits — to move people who have planted their roots in the area, who are likely to be politically at odds with Texas,” he said. “They may not want to replace Gavin Newsom with Greg Abbott.”