Earlier this month, Elon Musk told analysts on an earnings call that Tesla would be moving its headquarters from California to Texas. The surprise announcement was treated as another proof point that companies are fleeing California.
But the facts tell a different story: Tesla hasn’t succeeded in spite of California. It has succeeded because of California. Like the countless other companies — from powerhouses such as Apple and Google, to the startups whose new ideas might someday change the world — Tesla’s founders brought their dreams here because of the state’s unique assets.
California’s public and private leaders cultivate a culture of inclusion and innovation that welcomes new ideas and celebrates imagination— we have more engineers, more scientists, more researchers and more Nobel laureates than anywhere else in the nation. This culture is paired with a long history of progressive policies including some of the most ambitious climate targets in the world that drive innovation. And investment.
In 2020, California attracted more than 50% of the nation’s venture capital, more than double the next three states combined, Massachusetts, Texas and New York. Our state is No. 1 in the United States when it comes to foreign-direct investment (FDI), with more than 5 million jobs being supported by trade and FDI.
Add in the world’s best system of higher education, a highly skilled workforce, a ready-made consumer base of nearly 40 million people, access to global markets through three of the nation’s five largest ports and you have all of the ingredients needed to invent the future. Not just in zero emission vehicles, but in aerospace, agriculture and ag tech, biotech, clean tech, entertainment, high tech and more.
Time recently ranked the 100 most influential companies in the world: Nearly half of the 64 United States companies on the list are based in California, more than any other state. Tesla is on the list. But so are Netflix, Zoom, Beyond Meat and GoFundMe, all California-based companies. Chances are the next company to join that list will be based in California, too.
Despite the headline, Tesla’s California roots are deep. Consider the context:
• Tesla is expanding its core operations in California, not contracting. California remains Tesla’s No. 1 market. Tesla has approximately 35,000 employees in California, and growing. In September, the company broke ground on its Lathrop Megafactory. It also signed a lease in Palo Alto to expand its research and development capacity and expects to expand vehicle production at its Fremont facility by 50%.
• Tesla would not have succeeded without California’s zero emission vehicle policies and programs. All told, Tesla has leveraged well over a billion dollars in direct and indirect California subsidies, ranging from the generation and sales of Zero Emission Vehicle and Low Carbon Fuel Standard credits to direct consumer subsidies through the Clean Vehicle Rebate Project, to CAETFA and California Competes sales tax exclusions, to research and development tax credits, to workforce support from the Employment Training Panel, and more.
• The opposite is also true — without Tesla’s success we would not have been able to set 2035 as a realistic all-ZEV target. Tesla has shown the world what is possible when an automaker focuses on zero emission vehicles as part of a connected ecosystem. And now new and legacy automakers are flooding into the EV market, bringing the goal of clean mobility ever closer.
When it comes to climate, air quality, energy and economic security, we don’t have time for petty politics.
Ultimate success won’t come down to just the government or just private industry; it takes both, working together to develop and implement policies that reward climate smart investment. Ten years ago, if someone projected Texas as even a potential champion of zero-emission vehicles, policymakers in both states would have been extremely skeptical. But a lot can change when the innovation ecosystem of California leads the way – and once again, creates the future.
Dee Dee Myers is director of Gov. Gavin Newsom’s Office of Business and Economic Development (GO-Biz).
Get Morning Report and other email newsletters