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Tesla to open HQ in Palo Alto after loudly ditching California

A person is in a car, looking down at a smartphone, with eyes partially closed.
Tesla CEO Elon Musk uses his mobile device as he sits in a Tesla car. (Photo by ODD ANDERSEN/AFP via Getty Images) | Source: Odd Andersen/AFP via Getty Images

Tesla Motors is taking over the former headquarters of HP in Palo Alto as its new global engineering HQ.

Musk, who has been spending a lot of time in the Bay Area due to his recent purchase of Twitter, made the announcement next to California Gov. Gavin Newsom in front of the building at 1501 Page Mill Road.

“This is a poetic transition from the company that founded Silicon Valley to Tesla,” Musk said, noting that Newsom was one of the first people to purchase a Tesla Roadster.  

Newsom touted California’s status as the top manufacturing state and possibly the world’s fourth largest economy, as well as the state’s role in helping Tesla transform the automotive industry.

Several Model Y electric vehicles stand on a conveyor belt at the opening of the Tesla Gigafactory Berlin Brandenburg on March 22, 2022 in Brandenburg, Grünheide, Germany. The first European factory in Grünheide, which is designed for 500,000 vehicles per year, is an important pillar of Tesla's future strategy. | Patrick Pleul/picture alliance via Getty Images
Model Y electric vehicles are showcased at the Tesla Gigafactory Berlin-Brandenburg. | Patrick Pleul/Picture Alliance via Getty Images | Source: Patrick Pleul/picture alliance via Getty Images

“In so many ways, I recognize the world we invented is now competing against us and you can’t rest on your laurels; you have to step up your game and you have to invest in your growth engines,” Newsom said. 

Tesla was based in Palo Alto for most of its history prior to the decision at the end of 2021 to relocate its central office to Austin, following Musk’s own departure to Texas. The move followed months of back-and-forth between Musk and the state over Covid restrictions. 

The automaker still kept a major presence in California, at its former headquarters space in Palo Alto. 

Hewlett Packard Enterprise (HPE) corporate headquarters in Palo Alto. | Adobe Stock

Tesla has also continued to grow its operations at its Fremont manufacturing plant, which Musk said was the highest output automotive factory in North America with roughly 600,000 cars planned to come off the production line this year. 

The governor hailed the state’s regulation as a factor in helping accelerate investment as Musk looked on. 

“The world’s headquarters for engineering, for AI, for pushing out the boundaries is here in California. We have more scientists, engineers, researchers, Nobel Laureates, patents and still more venture capital than any other state in the nation,” Newsom said. 

A workforce analysis from Terrain Analytics shows that engineering talent is still centered in the Bay Area. In the past year, the Bay Area added more than 20,000 new software and internet jobs, compared with around 7,000 for the Austin metro area. The Bay Area continues to outrank Austin in both software and traditional engineering talent, according to Terrain’s analysis. 

Terrain estimated that Tesla has around 17,000 employees in the Bay Area compared with 4,000 in Austin, although the company is growing its headcount in Texas at a faster rate. 

Kevin Truong can be reached at