Elon Musk, CEO of Tesla, has informed buddies and associates that he’s planning to maneuver to Texas
Elon Musk, CEO of Tesla, speaks to the media as he visits the construction site of the future US electric car giant Tesla on September 3, 2020 in Gruenheide near Berlin.
Odd Andersen | AFP | Getty Images
Tesla CEO Elon Musk launched his California homes earlier this year while debating with state lawmakers over Covid-19 restrictions. At the same time, he has expanded his activities in Texas and has become accustomed to Republican Governor Greg Abbott.
Now, some of his close friends and co-workers say that Musk told them he was planning to move to the Lone Star State. People with knowledge of his plans asked not to be named because their conversations were private.
Musk, the second richest person in the world behind Amazon's Jeff Bezos, is already frequent in Texas. He spends most of his time between Austin, where Tesla and its tunnel start-up Boring Company operate, and a coastal village called Boca Chica, which is home to a SpaceX facility. SpaceX went live in Texas in 2003.
All you have to do is follow Musk on Twitter to see his presence in the state as he frequently posts photos and videos from SpaceX's test and home page, known as the Starship Production Complex.
Often condemned by the super-rich for its high tax rates and strict regulations, California saw an exodus of big-name tech names during the pandemic as companies seek to cut costs and prepare for a future of distributed work. Musk was one of the loudest critics that year, comparing the state to a championship sports team that has grown complacent and developed a "winning problem for too long".
In May, as businesses across California were forced to remain closed due to the pandemic, Musk tweeted that he was moving Tesla's headquarters and future development from California to Texas and Nevada.
Traveling to Texas from California with the highest income tax in the country, where there is no state income tax, could save you billions of dollars because of its 2018 compensation package. Musk has been granted 101.3 million options (adjusted after a 5-for-1 stock split this year) that will vest over time as the company hits certain milestones, including market capitalization numbers.
Tesla's stock is up 782% over the past year. As of October, Musk had received awards currently valued at approximately $ 20 billion before tax, based on Thursday's close of trading, a portion of the potential total.
Don't imagine possessions
Pinpointing where Musk lives at any given time is challenging, as he claims he is selling all "physical possessions" and tweeted in May that he "won't own a home". Shortly thereafter, he put some of his California homes up for sale. CNBC couldn't find any public records to suggest he officially changed his residence, and the White Pages' online database continues to list his primary address as Los Angeles.
Even the people who know him well and are aware of his general plans to move to Texas say that they don't know exactly where he will be when he's there and that he tries to keep these details a secret.
The state's top lawmaker, Governor Abbott, sure seems to believe Musk is making the move.
In July Abbott said on CNBC's "Squawk Box" that Musk had told him he had obtained a Texas driver's license and was now a "good faith Texan." Abbott also said Musk would build his next Tesla factory in the state because it would give him the freedom "to expand the way he wanted to expand". When an Abbott spokesman was contacted about the story, he declined to comment on Musk's plans.
To attract Tesla's new factory, Austin officials granted the company tens of millions of dollars in real estate tax relief. Musk confirmed on the company's earnings forecast for the second quarter in July that the plant would occupy approximately 2,000 acres 15 minutes from downtown and would be used to build the Cybertruck, its Semi, Model 3 and Model Y cars over the next year.
In addition to SpaceX and Tesla, Musk & # 39; s Boring Company has an office in Texas. Seven of the aspiring company's 17 job openings on its website are in Austin, and Musk has suggested building a tunnel there. Boring Company investor Joe Lonsdale, co-founder of Palantir and friend of Musk, recently moved to the Austin area from Silicon Valley.
Tesla's headquarters are currently still in Palo Alto, California, and the company continues to build cars in nearby Fremont. SpaceX's primary address is Los Angeles County at 1 Rocket Road in Hawthorne.
But Musk's personal financial reasons for leaving California are significant. As part of his 10-year compensation package, approved in 2018, Musk earned well over $ 50 billion in shares and awards in 12 tranches – he's already hit the fourth. He would have to pay income tax on the winnings if he exercises the options. The highest state income tax rate in California is 13.3%. It's zero in Texas.
Musk's awards began after the company hit a market cap of $ 100 billion, along with specific metrics for revenue or adjusted earnings. Every $ 50 billion increase in market capitalization, up to $ 650 billion in total market value, results in a further payout if a sales or profitability target is met. The company is already valued at over $ 550 billion after starting the year well below $ 100 billion.
During the third quarter, the second and third tranches vested, and the fourth was reached in October, the company said in its last quarterly report. This corresponds to around 33.8 million of the 101.3 million shares. For the package to stay intact, Musk must remain either CEO or Executive Chairman and Chief Product Officer.
Musk and Tesla and SpaceX spokespersons did not immediately respond to requests for comment.
CLOCK: Texas Governor Greg Abbott on Tesla's new Austin facility