Elon Musk said on Tuesday that he would move the headquarters of two of his companies – social media platform X and rocket maker SpaceX – to Texas, escalating an increasingly bitter fight with California, The New York Times reports.
Mr. Musk blamed a California law signed on Monday by Democratic Governor Gavin Newsom that prohibits school districts from requiring teachers to notify parents if their children change their gender identity. Mr. Musk called the law “the last straw” and said he had warned Mr. Newsom that such a law would “force families and businesses to leave California to protect their children.”
He also said SpaceX would move its headquarters from Hawthorne, California, to Starbase in Boca Chica, Texas. Company X, based in San Francisco, will move to Austin.
SpaceX, X and Mr. Musk did not immediately respond to a request for comment. Mr. Newsom’s office responded by pointing to a post published on X’s website on Tuesday that hinted Mr Musk was pandering to Donald Trump. On Saturday, Mr. Musk endorsed the former president.
What makes Texas better than California
X owner has long had a hateful relationship with California, unhappy with what he sees as excessive government interference in the state’s affairs. He previously moved the headquarters of his electric car company Tesla from Palo Alto, California, to Austin after a coronavirus-contaminated laboratory in the Bay Area was shut down in 2020. Mr Musk called the restrictions that caused the Tesla plant in Fremont, California, to close ‘fascist’.
He also criticised the state for being slow to innovate and delaying improvement projects because of over-regulation. Musk said crime and drug abuse in San Francisco made it difficult for him to come and go from X’s office. He has argued with local politicians and said the city is caught in a “loop of doom.”
However, he is hesitant to leave California entirely, continuing to use Silicon Valley and its tech talent for his developments in artificial intelligence and engineering.
Texas has no income or capital gains tax, making it an attractive place to live for high-income earners like Musk and some of his employees. The governor’s office did not immediately respond to a request for comment.
According to Eric Talley, a professor of corporate law and governance at Columbia Law School, moving the headquarters would have a limited impact on the underlying financial performance of Mr. Musk’s companies. Mr. Talley said:
The optics of this whole thing is that Mr. Musk is making this announcement as kind of a protest statement, something that has nothing to do with corporate law. I would be surprised if either SpaceX or X ends up completely evacuating the state.
Musk on transgender issues
Mr. Musk has been outspoken on transgender issues. He complained online, writing on the website X in 2020 that “pronouns suck.” He instructed staff who monitor hate speech on the platform to consider “cisgender” – a word for people who are not transgender – a swear word, he said in a post on X.
Meanwhile in 2022, one of Mr. Musk’s children filed paperwork to officially change his name and gender. According to Musk’s biographer, Walter Isaacson, she tried to hide her gender identity from her father, but he found out from another family member. In documents related to the name change, the daughter wrote:
I no longer live with or wish to be related to my biological father in any way, shape or form.
A new California law is designed to protect transgender children from being exposed by their parents. Several school boards in California have adopted policies requiring school officials to inform parents if their child decides to change their name or gender identity, but a new law will prevent this.
Tennessee and North Carolina have passed similar laws requiring teachers to inform parents as part of a “parental rights” movement backed by national conservative organisations.
In addition to avoiding California’s laws by threatening to move some of his companies’ headquarters to Texas, Musk has sought to remove his firms from the legal oversight of Delaware courts. Although many of his companies, including SpaceX, Tesla and X, were headquartered in California, they chose Delaware as their official legal address – a state that corporations typically choose because of its tax system and business-friendly courts.
Tesla was sued in a Delaware court over the size of Mr. Musk’s salary as CEO of the carmaker. In January, a Delaware judge struck down the compensation package, calling it excessive. In response, Tesla shareholders approved the package, valued at about $46.5 billion, and moved the company’s registered office to Texas.
