The Tesla HQ is leaving California. This is not a drill. In a breaking news story, Tesla just announced that it will be moving its headquarters from Palo Alto, California, to Austin, Texas. Tesla is currently building out a plant to manufacture cars and batteries in Austin and will move the HQ offices to the new facility once they are completed.

Why Tesla HQ is leaving California

Tesla CEO Elon Musk has previously threatened to move Tesla out of California entirely. The threat came when Musk was frustrated with coronavirus (COVID-19) protocols that required citizens to shelter-in-place. That protocol kept his employees at home and off the Tesla production line. Elon believed the stay-at-home order was overly restrictive and threatened to completely pull Tesla’s operation out of the state.

According to a Reuters report, during an annual meeting at Tesla’s factory in Texas, Elon Musk broke the news. “I’m excited to announce that we’re moving our headquarters to Austin, Texas,” said Musk.

Tesla would not be the first automaker to move its headquarters out of California. Nissan and Toyota have both vacated the Golden State for lower taxes elsewhere. Nissan moved its operations to Franklin, Tennessee, while Toyota moved to Plano, Texas.

Regarding why the Tesla HQ is leaving California in the first place, Musk cited the growing housing crisis in the state as one of the reasons. “It’s tough for people to afford houses in California,” said Musk. He also mentioned that it is becoming increasingly difficult to expand the HQ offices in the Bay Area of California.

While Musk did not mention it specifically, Texas is also known for cheaper labor, lower taxes, and looser regulations from the state government.

Tesla is not leaving California completely

Despite Elon’s threats during the early days of the global pandemic, the CEO wanted to make it clear that Telsa is not pulling out of California entirely.

“This is not a matter of, sort of, Tesla leaving California,” said Musk. While Tesla HQ is leaving California, the factory in Freemont will remain. Musk also stated that he plans to increase output from the California and Nevada Tesla factories by 50%. Though he did mention that the Freemont factory is “jammed.”

Moving to Texas could be a PR nightmare for Tesla

On paper, it seems clear why Elon Musk would want Tesla HQ to move out of California. However, choosing Texas may come back to bite the CEO. Currently, Texas is facing significant backlash due to its recently passed laws on abortion in the state. The anti-abortion law is the most restrictive in the country. It empowers citizens to sue anyone they believe might be involved with an abortion, including Lyft and Uber drivers that transport a woman to a clinic.

Some could see Tesla’s move to Texas as a major slight against its female employees. Considering Elon Musk’s outspoken nature, if he chooses to comment on this issue, it could have significant ramifications on Tesla’s public image and stock price. In the past, Musk has stated that he prefers to stay out of politics but occasionally, he breaks that rule.

It remains to be seen if Tesla can smoothly make the move out of California with minimal personal and financial casualties.