Tesla may be heading to Texas, but here’s why the Bay Area is a still a center for EV tech

Tesla may be heading to Texas, but here’s why the Bay Area is a still a center for EV tech

First off, the news: Tesla has officially announced it is moving its headquarters from Palo Alto to Austin, Texas. The decision has led to a lot of hand wringing among economic development types about familiar narratives about the exodus of companies leaving the Bay Area and the decline of the region as a center for the burgeoning electric vehicle market.

A counterpoint? The Bay Area still functions as a still major hub for nearly all parts of the industry ranging from manufacturing to components to research, and the state itself is one of the major forces in making electric vehicles a leading industry segment.

It’s still unclear if Tesla (NASDAQ: TSLA) intends to completely shut down its Palo Alto office, with the city’s mayor characterizing the move as “just a business registration change.” What is certain is that the company will continue to have a strong presence in the Bay Area. The company said it would continue its Fremont factory operations and actually intends to expand production at the site by some 50%.

On Friday, Governor Gavin Newsom weighed in on Tesla, touted the state’s status as an economic engine and took a jab at Texas in the process.

“I was encouraged to read about Elon’s commitment to increasing production in California by 50%. That would mark a headline in any other traditional day,” Newsom said at a press conference. “I also am proud that California is the fastest growing economic jurisdiction in the world over the last five years. In fact we’ve grown at 21% GDP. We have outpaced all Western Democracies. Germany, Japan, the United States. And substantially outpaced Texas. With respect to Texas, they’ve grown at 12% GDP in the last five years. California? 21%. Not even close.”

Last year, Newsom signed an executive order banning sales of new gas-powered cars in the state by 2035, and the state has launched incentive program to help lower-income residents switch to hybrid and all-electric vehicles. Eligible Bay Area residents can apply to receive up to a $9,500 credit through the Clean Cars For All program.

The headquarters move was little surprise to those who have been watching the news. Elon Musk has quarreled with local officials, most infamously during the early months of the pandemic when he called California’s public health shutdowns “fascist,” but again Tesla still has strong ties to the Bay Area. Part of the reason is that its Fremont factory is located less than 300 miles from its battery factory in Sparks, Nevada. By comparison, its newest factory under construction near Austin will be 1,700 miles away. His other two companies, SpaceX and the Boring Company, also have a presence in Texas (and he noisily changed his residence to the state last year) so it’s plausible that Musk is simply consolidating in the state and turning it into a regional Tesla hub.

Closer to home, there are more than 200 companies based in the Bay Area working on all things electric vehicles, according to LinkedIn. Here are 12 notable ones now that the top dog is skipping town.

  • Proterra, Burlingame: Develops and manufactures components and heavy-duty electric vehicles, including buses.
  • Lucid Motors, Newark: Produces luxury electric cars.
  • Lit Motors, San Francisco: Developing two-wheeled electric vehicles.
  • Nio, San Jose: The China-based electric vehicle maker has its North American headquarters and a research center located in Silicon Valley.
  • Motiv Power Systems, Foster City: Develops components for electric vehicles and provides charging infrastructure and support for commercial fleets.
  • QuantumScape, San Jose: Develops solid-state lithium batteries for electric vehicles.
  • ChargePoint, Campbell: Provides electric vehicle charging infrastructure for businesses, fleets and consumers.
  • Wrightspeed, Alameda: Produces electric powertrains.
  • Boson Motors, San Jose: Develops electric light utility vehicles.
  • Amply Power, Mountain View: Provides commercial electric fleets with charging-as-a-service.
  • eIQ Mobility, San Francisco: Provides software for electric vehicle fleets.
  • Tropos Technologies, Morgan Hill: Manufactures electric, low-speed utility vehicles.

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