SAN FRANCISCO -- Tesla is heading to Texas! CEO Elon Musk announced he's moving the company's headquarters from Palo Alto to Austin. The Tesla factory in Fremont will stay put.
Musk made the announcement from Texas during the company's annual shareholders meeting on Thursday.
There, the news was met with cheer and applause. However, back in the Bay Area, business leaders did not mince words.
"There's no way to candy coat it," Silicon Valley Leadership Group (SVLG) CEO Ahmad Thomas told ABC7 News. "It's disappointing news."
Thomas said nothing compares to the innovation infrastructure in California. Though Musk pointed to cost, with the company currently headquartered in Palo Alto.
"It's tough for people to afford houses. A lot of people have to come in from far away," he told shareholders. "We'll take it as far as possible, but there's a limit to how big you can scale in the Bay Area."
Thomas countered, "There's no doubt this is an expensive place to do business, but I think the benefits on the other side of the ledger outweigh those costs."
Still, he admitted, "The value proposition in California needs to be enhanced, or it will be harder and harder to keep our core set of companies and achievers here."
However, Musk will still be making Tesla's in the Bay Area. He said the company is not moving out of its Fremont factory, adding he plans to increase output there by 50-percent.
It's the company's headquarters along Deer Creek Road in Palo Alto relocating to Austin.
San Jose State University (SJSU) professor and tech expert said, "This place is really the cradle of innovation. This is ground zero for the new technology or for the next technology."
Banafa said the move will make way for more opportunity.
"There's so many other Elon Musks still, you know, in making in the Silicon Valley," he shared. "There's so many other Tesla's in the making in Silicon Valley."
"I think Silicon Valley remains the Mecca and a great place to live and work and do business," Thomas added. "And for so many technology workers, there is no doubt a set of challenges associated with being here, given the cost of living."
"I would argue it has a higher potential for return on investment for companies located here," he continued.
Banafa told ABC7 News, "We have the best universities, we have the most diversity, we have the best weather. And those are the three factors that you think about for any place that you can run a business."
ABC7 News reached out to the City of Palo Alto.
City Manager Ed Shikada said, "The City of Palo Alto is disappointed by the news of Tesla moving its headquarters from Palo Alto to Texas, as Tesla has been a member of the Palo Alto community for over a decade. This change reflects the innovative cycle and nature of Silicon Valley, where we are seeing highly mobile companies in our region evolve. We look forward to continuing to adapt to the economic forces at play."
Mayor Tom DuBois added, " I am not surprised that Tesla is changing their corporate HQ mailing address given that Mr. Musk moved there several years ago. We expect they will keep their engineers and innovation center in Palo Alto as have several other car, electric truck and even electric airplane companies. They have been good corporate citizens, hired a lot of Stanford grads. We wish them well."
"And I expect Palo Alto will remain the number one city in the country for electric car ownership per capita," the mayor concluded.
The City of Fremont released the following statement to ABC7 News:
"We are proud of the over 10,000 jobs Tesla has at its facilities in Fremont, where the company operates one of the largest manufacturing operations in the world. The company continues to expand its Fremont presence and since its inception, Tesla has added numerous facilities across the United States and internationally to support specific parts of its operation and better serve other markets.
Like the rest of the Bay Area, Fremont is home to many companies which are headquartered elsewhere, but with local operations that have significant impact on our local economy. California and the region continue to see business growth in a variety of sectors that depend on key attributes, including the skilled workforce, customer base, and supply chains.
We are happy to see Tesla grow into the world's leading manufacturer of electric vehicles and are proud of the supporting role Fremont has played in their success."
ABC7 News also reached out to Tesla, but has not heard back.
Elon Musk says Tesla will move Palo Alto headquarters to Austin
More TOP STORIES News