Elon Musk announced this week that he would move the headquarters of his companies X and SpaceX from California to Texas, culminating a long-running standoff between the volatile leader and the state where his companies were founded.
Just a year ago, Elon Musk said he would not move X’s headquarters out of San Francisco, despite claims that the city was in a “deadly spiral.” At the time, he wrote: “You only know who your real friends are when things are bad. San Francisco, beautiful San Francisco, even if others abandon you, we will always be your friend.”
But Musk changed his tune, citing a new California law banning transgender notification in schools as the reason for his departure in a series of angry tweets Tuesday. “The Governor of California just signed a bill that massively destroys parental rights and puts children at risk of permanent harm,” he wrote, saying the bill “attacks both families and businesses.” He responded to another tweet about his departure from California by saying that “many will follow” and then shared what appeared to be a heavily edited or AI-generated image of himself wearing a cowboy hat with the caption “Texas.”
Although the president has long complained about doing business in California, saying that in 2022 the Golden State is the land of “taxes, overregulation and litigation,” experts say the timing of the announcement suggests it’s about more than just an economic choice. It comes just days after Elon Musk threw his full support behind Trump, saying he would donate $45 million a month to a Super Pac supporting the former president.
“He’s making a political calculation,” said Sarah Kreps, a political analyst and professor of government at Cornell University. “If he had made this decision at any other time, it would be a different story. It’s part of a larger message he’s trying to convey about politics — and his policies.”
Elon Musk’s volatile relationship with California is well-known. The tech mogul launched SpaceX in 2002 in Hawthorne, a city in the Los Angeles metropolitan area, and has benefited from numerous tax breaks and incentives over the years — including more than $3.2 billion in direct and indirect California subsidies and market-friendly adjustments since 2009, according to statistics from Gov. Gavin Newsom’s office.
While symbolic, the move is likely to reignite the perennial debate over San Francisco’s “future loop,” the idea that the Bay Area city is trapped in an inexorable decline. With its 800,000-square-foot headquarters on Market Street in downtown San Francisco, X was one of the last companies with a major facility in the area. Since 2019, the top 20 tech companies have cut the amount of office space they lease in downtown San Francisco in half. Earlier this month, Twitter began looking for subtenants for its offices.
For nearly 15 years, downtown San Francisco has been trying to address urban blight. X, formerly Twitter, had previously benefited from a tax break passed in 2011 designed to attract companies to San Francisco’s Mid-Market District, which had long struggled economically. The law was repealed in 2019, and the departure of X’s headquarters could represent another blow to the area, where 46% of office space and 40% of retail space are vacant. Other companies that have left or downsized their San Francisco offices since 2021 include Meta, Salesforce, Snap, Lyft, Block, Airbnb and Paypal.
Many employees and customers of Musk-owned companies will inevitably remain in California, making the moves more symbolic than practical, experts say. Musk previously moved the headquarters of his electric car company Tesla from California to Texas in response to the state’s coronavirus measures, which he called “fascist” as he clashed with regulators over keeping his facilities open amid the pandemic. Now, however, several Tesla factories remain in California, including one of its largest manufacturing sites — the Fremont, California, gigafactory.
“As long as these companies have an economic presence in California, the state will always have an impact on them,” said Eric Talley, a professor of corporate law at Columbia Law School. “If you want to completely isolate yourself from the state, you’ll have to not only move your headquarters, but you’ll have to stop selling and manufacturing in California — and I doubt that’s going to happen.”
The changes may be more pronounced for SpaceX and X than for other tech companies, as Musk has been pushing for employees to return to in-person work. After acquiring X in 2022, Musk ordered nearly all of his employees to return to the office full time, demanding that they be “extremely diligent.” SpaceX has also mandated that its employees stay in the office.
Musk’s announcement and Newsom’s targeting of X sparked a back-and-forth between the leader and the California governor, who tweeted “you bent the knee” — implying that Musk had pledged his loyalty to Trump. Musk then responded, “you never get up from your knees.”
Even if Musk has changed his political mind, experts say, it will be difficult to convince the majority of X and SpaceX employees to leave California, a relatively liberal and tech-focused haven, for a Republican state like Texas. Moving a company’s headquarters is easy, Talley said. Moving employees? Not so much.
“It takes a lot to shake up a nice place with huge network advantages — to move people who have planted roots in the area and who, quite frankly, are probably politically at odds with Texas,” he said. “They may not want to trade Gavin Newsom for Greg Abbott.”
