Tesla Will Move Its Headquarters to Austin, Texas, in Blow to California

Tesla will move its headquarters from California to Austin, Texas, where it is building a new factory, its chief executive, Elon Musk, said at the company’s annual shareholder meeting on Thursday.

The move makes good on a threat that Mr. Musk issued more than a year ago when he was frustrated by local coronavirus lockdown orders that forced Tesla to pause production at its factory in Fremont, Calif. Mr. Musk on Thursday said the company would keep that factory and expand production there.

“There’s a limit to how big you can scale in the Bay Area,” he said, adding that high housing prices there translate to long commutes for some employees. The Texas factory, which is near Austin and will manufacture Tesla’s Cybertruck, is minutes from downtown and from an airport, Mr. Musk said.

Mr. Musk was an outspoken early critic of pandemic restrictions, calling them “fascist” and predicting in March 2020 that there would be almost no new cases of virus infections by the end of April. In December, he said he had already moved himself to Texas to be near the new factory. His other company, SpaceX, also launches rockets from the state.

Tesla’s headquarters have been in Palo Alto for more than a decade. The city, home of Stanford University, is across the bay from Fremont.

Tesla is one of several California companies to say they were moving to Texas in recent months. Hewlett Packard Enterprise said in December it was moving to the Houston area and Charles Schwab has moved to a suburb of Dallas and Fort Worth.

Mr. Musk’s decision will surely add fuel to a ceaseless debate between officials and executives in Texas and California about which state is a better place to do business. Gov. Greg Abbott of Texas, and his predecessors, have courted California companies to move to the state, arguing that it has lower taxes and lower housing and other costs. California has long played up the technological prowess of Silicon Valley and its universities as the reason many entrepreneurs start and build their companies there, a list that includes Tesla, Facebook, Google and Apple.

Mr. Musk revealed the move after shareholders voted to force Tesla board members to run for re-election annually, down from every three years, according to preliminary results announced by the company. They also voted to require the company to publish more detail about efforts to diversify its work force.

In a report last year, Tesla revealed that its U.S. leadership was 59 percent white and 83 percent male. The company’s overall U.S. work force is 79 percent male and 34 percent white.

The vote comes just days after a federal jury ordered Tesla to pay $137 million to Owen Diaz, a former contractor who said he faced repeated racist harassment while working at Tesla’s factory in Fremont, in 2015 and 2016. Tesla faces similar accusations from dozens of others in a class-action lawsuit.

The diversity report proposal, from Calvert Research and Management, a firm that focuses on responsible investment and is owned by Morgan Stanley, will require Tesla to publish annual reports about its diversity and inclusion efforts, something many other large companies already do.

Investors also re-elected to the board Kimbal Musk, Mr. Musk’s brother; and James Murdoch, the former 21st Century Fox executive, despite a recommendation to vote against them by ISS, a firm that advises investors on shareholder votes and corporate governance.