Tesla CEO Elon Musk plans to move to Texas, say friends and associates

Tesla CEO Elon Musk put his California homes on the market this year as he wrestled with state lawmakers over Covid-19 restrictions. He simultaneously expanded his operations in Texas and joined forces with Republican Governor Greg Abbott.

Now, several of his close friends and associates say Musk told them he was planning to move to the Lone Star State. People with knowledge of his plans asked not to be named as their conversations were private.

Musk, the second richest person in the world behind Amazon’s Jeff Bezos, is already in Texas frequently. He spends most of his time between Austin, where Tesla and his tunnel start-up Boring Company have operations, and a coastal village called Boca Chica, which is home to a SpaceX facility. SpaceX began operations in Texas in 2003.

You just need to follow Musk on Twitter to see his presence in the state, as he often posts photos and videos of SpaceX’s test and launch site known as the Starship Production Complex.

California, often condemned by the super rich for its high tax rates and strict regulations, has seen an exodus of notable tech names during the pandemic as businesses seek to cut costs and prepare for a working future distributed. Musk has been among the loudest critics this year, comparing the State to a championship sports team that has become complacent and developed a “win problem for too long.”

In May, as businesses across California were forced to remain shut down due to the pandemic, Musk tweeted that he was moving Tesla’s headquarters and future development from California to Texas and Nevada.

Getting out of California, with the highest income tax in the country, and going to Texas, which has no state income tax, could save Musk billions of dollars based on its compensation program awarded in 2018 (5 to 1 this year) which accrues over time as the company hits certain milestones, including market capitalization numbers.

Tesla’s stock jumped 782% last year. By October, Musk had won awards worth around $ 20 billion pre-tax, based on Thursday’s close, part of the potential total.

Determining where Musk lives at any given time is a challenge as he claims to be sell all “physical goodsAnd tweeted in May that he “won’t own a house.” Soon after, he put several of his homes in California up for sale. CNBC has been unable to find any public documents suggesting he has officially changed his residence, and the online White Pages database still lists his primary address as Los Angeles.

Even people who know him well and are aware of his general plans to move to Texas say they don’t know exactly where he stays when he is there and that he tries to keep those details private.

The state’s main legislator, Governor Abbott, certainly seems to think Musk is making the jump.

In July, Abbott told CNBC’s “Squawk Box” that Musk had told him he got a Texas driver’s license and was “bona fide Texan now.” Abbott also said Musk was building his next Tesla factory in the state because it would give him the freedom “to expand the way he wanted to grow.” When contacted for this story, an Abbott spokesperson declined to comment on Musk’s plans.

To help attract Tesla’s new plant, Austin officials have given the company tens of millions of dollars in property tax breaks. Musk confirmed during the company’s second quarter earnings call in July that the plant would occupy about 2,000 acres 15 minutes from downtown and would be used to build the Cybertruck, its Semi, Model 3, and Model Y. Musk said the plant will start delivering cars next year.

Along with SpaceX and Tesla, Musk’s Boring Company has an office in Texas. Seven of the fledgling company’s 17 job postings on its website are for positions in Austin, and Musk has hinted there will be a tunnel. Boring Company investor Joe Lonsdale, co-founder of Palantir and friend of Musk, recently moved to the Austin area from Silicon Valley.

For now, Tesla’s headquarters are still in Palo Alto, California, and the company continues to build cars in nearby Fremont. SpaceX’s primary address is in Los Angeles County at 1 Rocket Road in Hawthorne.

But Musk’s personal financial reasons for leaving California matter. Under his 10-year compensation package approved in 2018, Musk could earn well over $ 50 billion in stock and awards in 12 installments – he’s already reached the fourth. He should pay income taxes when he exercises the options. The highest tax rate in the state of California is 13.3%. In Texas, it’s zero.

Musk’s rewards started appearing after the company hit $ 100 billion in market cap, along with specific indicators of adjusted revenue or earnings. Every $ 50 billion increase in market capitalization, up to $ 650 billion in total market value, results in another payout if it is met with a goal of income or profitability. The company is already worth over $ 550 billion, having started the year well under $ 100 billion.

During the third quarter, the second and third tranches were acquired and the fourth was completed in October, the company said in its latest quarterly report. This equates to roughly 33.8 million of the 101.3 million shares. In order for the packaging to remain intact, Musk must remain either CEO or executive chairman and chief product officer.

Musk and spokespersons for Tesla and SpaceX did not immediately respond to requests for comment.

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