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According to Elon Musk, why is Tesla moving its headquarters from California to Texas? What are his objections to California? What are the advantages of having Texas as the location for the main headquarters?

(use locational advantage model, also called National Competitive Advantage, Fig 2.2., in week 2. Do additional research specifically in Factor Conditions, that is Inputs to a firm's value chain)

There are numerous reason's to moving the headquarter from California to Texas. One such reason is California culture, which according to Elon was becoming stagnated and complacent which in essence prevented innovation and the other reason is taxes. n addition, there are less regulatory restrictions in Texas compared to California which its seems have ton can bog down a business to get its product out the door. California has the highest personal income tax which 13.3% and Capital gains are also taxed at similar rater. Thus when Texas does not collect state income or capital gains tax for individual it can save Musk billions of dollars in tax money. Furthermore, it seems the tax advantages spilled over to Tesla as well. The county where the giga factory is based, Travis County, voted to give at least $14.7 million in tax breaks to Tesla. Furthermore, Tesla could further bring down the overall tax bill by taking advantage of Texas's gross receipts tax . The gross receipt tax benefits business with vertical supply chains which Tesla posses due to having a massive battery manufacturing plant, a critical component in its electric car hence it produces a key input to its manufacturing of cars. consequently the biggest advantage to moving to Texas is taxes, less hassle with government regulation cause Texas is more business friendly, Lower cost of living which can assist the company to retain and capture resources and furthermore its beneficial for manufacturing cause most of its supply chain can be closer to the headquarters.

Besides just the issue of Californian culture and taxes, what more general issues does the Tesla case raise? In real estate it is usually said that the three most consider most important criteria are "location, location, location. " Now, does remote working means that location is a less important criterion for issues like where to put corporate headquarters? In other words, will even corporations like Tesla no longer feel that they have to have their headquarters in Silicon Valley?

Tesla's move from the Silicon Valley to Texas marks the latest blow for California which the electric car manufacture called its home for the past 18 years. Tesla is joining other companies like Oracle, HP and Charles Schwab in relocating their corporate hubs to the cheaper and more tax friendly lone star state. The shift of these companies highlight the many of California's intractable issues, from the nation's most expensive housing costs to high taxes to social catastrophes (crimes/homelessness) to climate changes (wild fires etc). Furthermore, according to Musk there is a "limit to how big you can scale in the Bay Area" thus limited opportunities to expand is another issue that the company faced while deciding to move. In addition, Tesla had to offer ever more generous compensation so that workers can keep up with sky high housing costs as many workers have been priced out of living near their work so making long commutes a normal practice. Consequently have a location in Austin will limit that by offering a better housing conditions and the location of the factory being about 5 minutes from the airport and 15 minutes away from downtown can be attractive as well. Thus location of the new Factory increases the attractiveness of the reason why Tesla needed to move. With remote working it allows further reason to move. COVID proved to companies that they could effectively operate elsewhere. The silicone valley's office vacancy rate was up to about 15% during last October as more employers looked to offload space which they never tend to use especially since the new norm is work from home.

Will the Musk decision lead to changes in the politics, culture, and perhaps the complacency of Silicon Valley? In other words, does the Tesla move signal to cities everywhere that they have to become more competitive if they want to keep their corporations based there? Why or why not?

Tesla's move is more a symbolic blow than an economic one. While the tech industry is a significant part of the state's economy, California reaps the rewards of other lucrative sectors, such as trade and entertainment. Silicon Valley also remains a magnet for tech investment. In the third quarter of 2021, there were a record $27.1 billion worth of venture deals struck in the region, a 17% increase from the previous three months, according to a recent report on venture capital from CBInsight. The region still remains key for the tech industry, with its depth of talent and access to renowned universities. Therefore, i think Cities do need to be more competive if they want to retain their reowned business. Tesla's decision to move was due to multiple factor it was mainly due to California's underlying isues that they need answer s like housing shortages, Taxes and climate change impact from drought, wild fires etc. Therefore, Cities need to hear the business and try to work with them and highlight insentive projects to further intiece business to stay.