Gov. Greg Abbott said Friday that Elon Musk decided to build the next American Tesla factory in Texas, in part because the state offers more “freedom” than places like California.
“He wanted to enter a state where he had more freedom where he could expand in the way he wanted to expand. He has a remarkable vision that goes far beyond this announcement,” said the Republican on CNBC’s “Squawk Box”.
Musk ended long-standing speculation about the factory’s location on Wednesday during the company’s earnings call. The executive director said the factory, which will be located about 15 minutes from downtown Austin, will be an “ecological paradise.”
“We are going to turn it into a factory that will be impressive; it is right on the Colorado River. So we will actually have to have a boardwalk over you, hiking, biking trail,” he said, adding that it will be “open to the public. too”.
Based in Palo Alto, California, Tesla has a car factory in the United States, located across the San Francisco Bay in nearby Fremont. The electric vehicle maker opened a factory in Shanghai, China last year and is also aiming to build one outside of Berlin, Germany.
Abbott said the talent located in the Austin area is another reason why Tesla would want to build a factory there. But Abbott also called Musk a “transformative thinker” and painted the lone star state as an optimal place to introduce that transformation.
“He knows he has a better ability to do that in Texas with the freedoms we offer him, with the low costs we offer him, than in other places, like California,” Abbott said.
However, Musk emphasized the earnings call that he was committed to California and said the company “will continue to grow” in the state. The company will build the Tesla Model S and Model X in California for global deliveries and the Tesla Model 3 and Tesla Model Y for western North America, Musk said.
In Austin, Musk said, Tesla intends to build its Cybertruck, its Semi, and Model 3 and Model Y for the eastern half of North America.
“And then we think the Tesla Roadster, a future program, would probably make sense in California as well. So I think this is a good split between Texas and California,” Musk said on the call.
Austin has been one of the fastest growing cities in the United States in recent years, and has built a reputation as a technology hub away from Silicon Valley.
In fact, Tesla’s high-tech spirit is another reason why locating the factory near Austin is a good option, Mayor Steve Adler told CNBC on Friday.
Tesla estimates that the $ 1 billion factory complex will bring at least 5,000 jobs to start. Adler said Austin has a lot of well-paying jobs but “where we really are lacking is those middle-skill jobs.”
“The opportunity to have manufacturing with thousands of medium skill jobs, clean manufacturing, manufacturing that has a technological link, to match Austin,” Adler said in “Squawk on the Street.” “And it is located in a part of our city that historically has not had economic engines, so it hits us with many cylinders.”
President Donald Trump on Friday also applauded Musk’s decision to build the factory in Texas.
Both Adler and Abbott sought to minimize the role of tax incentives in consolidating Musk’s decision to choose the Austin area. Travis County, the home of Austin and a local school district have approved tax refunds for the project that combined are worth at least $ 60 million, according to US statesman Austin.
“In my personal conversations with him, the tax benefits were helpful. But they weren’t really the incentive. The incentive was the opportunity for what I could achieve in Texas,” said Abbott, who noted that Musk’s other company, SpaceX, has operations. in the state.
“In fact, he said he changed his [driver’s] license from a California license to a Texas license already. So now he is a Texan in good faith, “he added.
Tesla shares fell more than 5% on Friday, trading below $ 1,500 each. The stock, which is up more than 240% this year, hit a record high of nearly $ 1,800 last week.
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