When Elon Musk speaks, people listen.
And Musk is more than simply talking. His various corporate entities are making enormous investments in Texas. Whether for electric vehicles, high-speed underground train systems, or rockets headed to space, Musk has found a home in the Lone Star State.
Texas has made it attractive for companies like Tesla to make those commitments. Minimal red tape, generous property tax concessions, talent drawn by the prospect of no personal income tax and a high overall quality of living are luring hundreds of corporate relocations across the whole spectrum of American industry.
In fact, Texas is home to more Fortune 500 head offices than any other state.
“The Texas unemployment rate, now at four per cent, has fallen to its lowest level since before the pandemic in February 2020,” writes Adriana Cruz, executive director of Texas Economic Development and Tourism in the September issue of the Texas Business Bulletin. The department reports 30 new projects, representing capital investment of over $140 billion, were announced this past July alone.
However, few can match the singular pace of investment set by Musk over the past couple of years.
Tesla’s electric vehicle gigafactory in east Austin, opened in July 2022, is the company’s centerpiece and new headquarters. It’s the second biggest building in the world at 10 million square feet of factory space, equivalent to 15 city blocks. Thousands are expected to be employed, producing a projected 500 thousand vehicles each year, according to projections. The company also has a new cathode factory called Project Cathode currently under construction next to the gigafactory, amid reports it has applied to buy even more adjacent land.
In addition, Tesla-related entities have acquired hundreds more acres near Austin in Bastrop County, east of the Colorado River. The exact purpose has not been disclosed.
However, a filing with the Texas Department of Licensing and Regulation dated Aug. 31 suggests a half million square foot “shell building” called Project Echo. Scheduled for mid-2023 completion and with an estimated construction cost of $43 million, this facility is likely related to Tesla’s SpaceX program that has major operations in the state.
The Boring Company has also reportedly increased its land holdings to 250 acres in Bastrop County through a related company named Gapped Bass LLC. The Boring Company is said to be in discussions concerning three different tunnelling projects in Texas, including a 10-mile underground high-speed connector at San Antonio Airport.
Meanwhile, in Nueces County near Corpus Christi, there is talk of Tesla building a $365 million lithium battery facility that could be the first in North America to produce, refine and manufacture batteries for Tesla electric vehicles.
Elsewhere, Colorado River Project LLC, an entity used by Tesla to buy land in Travis County, owns more than 2,500 acres, with local reports that the company might purchase another 1,000 acres for what are, as of yet, unconfirmed purposes.
Musk’s interests extend beyond Tesla companies. He is also a partner in the medical start-up Neuralink Corp.
Neuralink focuses on creating brain transplants to treat paralysis and other neurological disorders and has posted several hiring notices in the Austin area. According to the Austin-American Statesman, the company plans a series of eight buildings covering 37 acres in the suburban area of Del Valle.
With such intense investment and the associated jobs comes local pressure and pockets of resistance.
Even before Tesla’s program of development near Austin, nearby Balstrop was already booming, with population up 30 per cent since 2010. Home prices near other high tech factories near Austin soared between 22 and 50 per cent year-over-year to June 2021. Direct new job creation from Tesla alone is projected as high as 20,000, and many times that’s when associated commercial activity is factored.
Some locals are concerned about the environmental risks associated with replacing swampland and other natural surfaces with concrete and asphalt, and resultant runoffs related to sudden heavy rains. Others dislike what is described as a “war among the states” based on tax-based incentive packages. In Texas, these tax breaks are often linked to property assessments that provide funding to local schools.
On the other hand, the high-quality jobs being offered have the side benefit of investment in post-secondary education. For example, the Austin Community College District has been the beneficiary of a partnership with Tesla to develop local talent.
Major tech investments like Tesla’s are certain to reset the Texas economy.
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