publive-image

Elon Musk's Big Move: Tesla's Headquarters Shifts to Texas

Tesla and SpaceX CEO Elon Musk has unveiled plans to soon launch a shareholder vote to move Tesla’s legal residence from Delaware to Texas. The decision follows a Delaware judge’s ruling that Musk’s $56 billion paycheck is unfair, prompting Tesla’s board to come up with a new compensation package.

Electric car company Tesla will begin the process of moving to Texas, where it is legally registered, its CEO Elon Musk announced. The company was incorporated in Delaware, but on Wednesday, Musk asked X, early users of Twitter a platform he also owns whether they should move it to the Lone Star State.

Of the more than 1.1 million people, 87.1 percent approved, and 12.9 percent disapproved. Tesla, already headquartered in Texas, decided to move out of Palo Alto, California, in 2021 and is one of five Giga plants in the home.

Musk also said recently that he is uncomfortable growing the automaker into a leader in artificial intelligence (AI) and robotics without voting control of at least 25% of the company, almost his current stake double the amount.

U.S. public companies are looking to incorporate in Delaware to gain access to the federal courts. Its corporate law places more restrictions on employees and protects investors than states like Nevada, making it easier for Delaware companies to raise capital.

TripAdvisor and its parent company are currently defending themselves against a lawsuit by shareholders, who have challenged the company's plans to reincorporate from Delaware to the Nevada.

More concerning is that the owner of Tesla is AI Martin, senior portfolio manager for shareholder Globalt Investments. Musk has little interest in Texas. He moved Tesla's corporate headquarters from California to the state in 2021 after challenging California laws and taxes, and clashed with health officials early in the outbreak to reopen a plant in Fremont.

The EV maker has one gigafactory in Texas, where it is also planning a more than $750 million expansion.It is also building a lithium refinery in the state, aiming to produce about 1 million EVs by 2025. Musk's other companies - SpaceX and the Boring Company also have operations in Texas. Musk voted on X as before, declaring the "yes" vote of 87% out of 1.1 million total votes cast as the deciding factor.

"Public opinion is definitely in favor of Texas! Tesla will need to hold an immediate shareholder vote to move the company state to Texas," Musk said in X.

Companies are generally incorporated in the country of their principal place of business or where the legal tax environment is considered more business-friendly. To change Tesla's state of incorporation, Musk had to register in Texas before leaving legally in Delaware. Not all states allow companies to incorporate elsewhere, but Texas and Delaware do.

Conclusion: As Tesla embarks on this transformative journey, the world looks on with anticipation, eager to see the next chapter in the company’s storied legacy. Led by Elon Musk, Tesla’s move to Texas signals a new era of innovation, transformation and limitless possibilities for a sustainable future.