Elon Musk announced on Tuesday that X and SpaceX would be moving their headquarters to Texas in response to a gender identity law passed by California. This is a major blow to Silicon Valley, as the billionaire has been at odds with California’s Governor, Gavin Newsom, for a long time.
Newsom, a Democrat from California, signed a law on Monday that prohibits school districts in the state from disclosing to parents information about a child’s sexuality or gender identity. This is to prevent forced “outing” of these students.
Musk who previously caused controversy with his public comments about transgender individuals, said Newsom’s decision to sign this legislation was the “final straw”.
Musk announced on his social media platform X that SpaceX would move its headquarters from Hawthorne in California to Starbase in Texas.
In a subsequent post, he confirmed that the headquarters of X will also be moving to Austin.
Musk, who has a transgender child but is estranged, told Newsom that he warned him about the law a year earlier, saying “laws of this type would force companies and families to leave California in order to protect their kids”.
Newsom responded by posting a screenshot from a post made by Trump in 2022 following the visit of Musk to the White House. In the post, the former president mocked Musk by claiming that the billionaire had flatteried him, asked for help with “subsidised project” and would have bowed to Trump if he had asked.
Newsom wrote: “You bowed the knee.”
Musk has made a number of moves to reposition companies across the country due to his dissatisfaction over state policies and operations. Musk had previously moved SpaceX’s legal incorporation from Delaware to Texas, after a Delaware court struck down his record-breaking $56bn Tesla pay package. Musk had moved the legal headquarters of his brain implant company Neuralink from Delaware to Nevada.
Last month, shareholders at Tesla, Musk’s electric vehicle company, voted in favor of his proposal for the company to be reincorporated in Texas.
Musk has become more vocal about US election politics in the last few months. According to a person familiar with the matter, Musk previously voted Democratic but on the weekend, he formally endorsed Donald Trump, Republican presidential nominee. He is planning to donate to the 2024 presidential campaign of Trump through a super-political committee.
The exit of two large technology companies would be a blow to the Silicon Valley eco-system, as many elites are growing disenchanted with what they perceive as chaotic local politics and restrictive regulations. They also see a rise in crime and homelessness and a rise in San Francisco’s crime.
According to CBRE, the office vacancy rate in the city is the highest among large US cities, at 37%. This was after businesses left during the pandemic lockdowns. There are fears that the decline in tax revenue could lead to an “doomsday loop”.
Musk wrote on Tuesday that he was tired of avoiding violent drug addict gangs to enter and exit the building.
By contrast, there has been a surge in corporate-headquarter relocations to Texas in recent years, especially from California, as companies are lured by the state’s low-tax, low-regulation approach.
According to the Governor’s Office, between 2015 and April this year, nearly 300 companies announced that they would be moving their headquarters to Texas. More than half were from California.
Texas Republicans welcomed the move. Ted Cruz, Texas’s fiery US Senator, wrote: “We are proud that you call Texas your home & Texas welcomes the HQs for both X & SpaceX.” Let freedom ring!”
Texas Governor Greg Abbott, a Republican as well, stated that the arrival of SpaceX “cement Texas as the leading space exploration state”.
SpaceX launches rockets at a launch site in Brownsville, located to the south of Texas. X announced in January that it would establish a trust and safety team of 100 people based in Austin. It has opened an Austin office as part this plan.
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