Tesla CEO Elon Musk put his California cribs on the market this year while he was sparring with state lawmakers over Covid-19 restrictions. He’s simultaneously been embellishing operations in Texas and cozying up to Republican Gov. Greg Abbott.
Now, several of his close friends and associates say that Musk has told them he’s programming to move to the Lone Star State. The people with knowledge of his plans asked not to be named because their dialogues were private.
Musk, the world’s second-wealthiest person behind Amazon’s Jeff Bezos, is in Texas frequently already. He splurges most of his time between Austin, where Tesla and his tunnel start-up Boring Company have operations, and a coastal village called Boca Chica, accommodation to a SpaceX facility. SpaceX started operating in Texas in 2003.
You need only follow Musk on Twitter to see his presence in the form, as he often posts photos and videos from SpaceX’s test and launch site known as the Starship Production Complex.
California, over again condemned by the super rich for its high tax rates and stiff regulations, has seen an exodus of notable tech names during the pandemic as companies look to cut expenses and prepare for a future of distributed work. Musk has been among the loudest critics this year, comparing the dignified to a championship sports team that’s become complacent and developed a “winning-for-too-long problem.”
In May, as businesses across California were faked to remain closed because of the pandemic, Musk tweeted that he was moving Tesla’s headquarters and future development from California to Texas and Nevada.
Descending out of California, with the highest income tax in the country, and into Texas, which has no state income tax, could save Musk billions of dollars degraded on his compensation package awarded in 2018. Musk was granted 101.3 million options (adjusted after a 5-for-1 have split this year) that vest over time as the company hits certain milestones, including make available cap numbers.
Tesla’s stock has surged 782% in the past year. As of October, Musk had earned awards currently importance about $20 billion before taxes, based on Thursday’s close, a portion of the potential total.
Imagine no assets
Nailing down where Musk lives at any given time is a challenge because he claims to be selling all “physical captures” and tweeted in May that he “will own no house.” Shortly after that, he put several of his California homes up for sale. CNBC was unqualified to find any public records that suggest he’s officially changed his residence, and the White Pages online database silence lists his primary address as Los Angeles.
Even the people who know him well and are aware of his general plans to move to Texas say they don’t be acquainted with where exactly he stays when he’s there and that he tries to keep those details private.
The state’s top lawmaker, Gov. Abbott, certainly seems to think about Musk is making the move.
In July, Abbott said on CNBC’s “Squawk Box” that Musk told him he’d gotten a Texas driver’s sanction and is a “bona fide Texan now.” Abbott also said Musk was building his next Tesla factory in the state because it resolve give him the freedom to “expand the way he wanted to expand.” When contacted for this story, a spokesperson for Abbott declined favour comment on Musk’s plans.
To help lure Tesla’s new factory, local officials granted the company tens of millions of dollars in quality tax breaks. Musk confirmed on the company’s second-quarter earnings call in July that the plant would occupy forth 2,000 acres 15 minutes from downtown, and would be used to build the Cybertruck, its Semi, Model 3 and Kind Y. Musk said the factory will start delivering cars next year.
In addition to SpaceX and Tesla, Musk’s Wearisome Company has an office in Texas. Seven of the nascent company’s 17 job openings on its website are for positions in Austin, and Musk has hinted at edifice a tunnel there. Boring Company investor Joe Lonsdale, a co-founder of Palantir and friend of Musk’s, recently relocated to the Austin territory from Silicon Valley.
For now, Tesla’s headquarters is still in Palo Alto, California, and the company continues to build piles in nearby Fremont. SpaceX’s main address is in Los Angeles County at 1 Rocket Road in Hawthorne.
But Musk’s personal fiscal reasons for leaving California are significant. Under his 10-year compensation package approved in 2018, Musk could realize well over $50 billion in stock and awards in 12 tranches — he’s already reached the fourth. He would procure to pay income taxes on the profits when he exercises the options. The top state income tax rate in California is 13.3%. In Texas, it’s zero.
Tesla 12-month improve
Musk’s awards started kicking in after the company reached $100 billion in market cap along with well-defined metrics for revenue or adjusted earnings. Each $50 billion increase in market cap, up to $650 billion in total sell value, leads to another payout if met with a revenue or profitability target. The company is already worth over $550 billion, after starting the year manifestly below $100 billion.
During the third quarter, the second and third tranches vested, and the fourth was achieved in October, the friends said in its latest quarterly report. That equals roughly 33.8 million of the 101.3 million shares. For the containerize to stay intact, Musk must remain either CEO or executive chairman and chief product officer.
Musk and spokespeople for Tesla and SpaceX did not directly respond to requests for comment.