Elon Musk's divorce with California leaves ugly grievances all around

CEO of Tesla Motors Elon Musk speakswearing a cowboy hat

By James RaineyStaff Writer

July 23, 2024 Updated 2:43 PM PT

Like many before him, Elon Musk came to California to make his name and fortune.

He hit Silicon Valley during the 1990s and the first internet boom, and began building his fortune with startups such as the information network Zip2 and the payments site PayPal.

Then it was on to new frontiers — space and electric cars. His Tesla electric cars benefited from California’s consumer subsidies, while SpaceX thrived in the growing space technology hub in Southern California.

No problem seemed beyond Musk’s belief that technology could overcome it. Frustrated by the long commute from his Bel-Air home to SpaceX headquarters in Hawthorne, the entrepreneur proposed building an underground tunnel that would whisk commuters on underground electric platforms that would reach speeds of up to 130 mph. (Boring Co. dropped that plan in 2018, though tunnel construction in other American cities continued.)

But in recent years, Musk’s California dreaming has been clouded with his dark view of a state that he accuses of “overregulation, overlitigation, overtaxation.”

“The final straw,” the billionaire said, came in the form of a law that prohibits school districts from requiring teachers to notify families about their children’s gender identity changes.

Emphasizing his disdain, Musk announced this month that he planned to move the headquarters of two of his companies — SpaceX and the social media hub previously known as Twitter — from California to Texas.

But critics said they saw inconsistency in Musk’s pronouncement — contending that the billionaire was finding fault with the state after years of benefiting from its blessings, including abundant government support, a green mindset and a highly educated workforce.

“California, through tax credits, [electric vehicle] subsidies and training grants made Elon successful,” Lorena Gonzalez Fletcher, president of the California Labor Federation, said via text. That amounts to “hundreds of millions in taxpayer dollars, for him to continually spit in the face of California’s workers & taxpayers.”

Edward Niedermeyer, author of “Ludicrous: The Unvarnished Story of Tesla Motors,” said Musk was happy to benefit from California’s largesse when it suited him and to move on when he saw fit.

“I think Musk has made the calculation that he’s gotten all the benefits he’s likely to get out of the state and he’s moving on to the next one,” Niedermeyer said. “The state of California clearly thought that all its work bought loyalty [from Musk] but, instead, I think it bought a sense of entitlement.”

A prototype of the Crew Dragon spacecraft on display at SpaceX in Hawthorne, Calif.

Musk revealed his plans for the two companies on his social media platform, X, a day after Gov. Gavin Newsom signed a law meant to protect transgender student rights — a policy that some parents argue diminishes the authority of families.

Musk said that in approving the law and others before it, California was “attacking both families and companies,” spurring him to move the headquarters of SpaceX to the company’s launch test site in Texas.

“I did make it clear to Governor Newsom about a year ago that laws of this nature would force families and companies to leave California to protect their children,” he said in a subsequent message on X.

In another X post, the 53-year-old businessman said he would move the X headquarters from San Francisco to Austin, Texas, saying that he has “had enough of dodging gangs of violent drug addicts just to get in and out of the building.”

California-bashing has become a regular right-wing talking point in recent years, and Musk often indulges in it.

But some California leaders see Musk’s stance as ungrateful for the role the state has played in supporting his successes, particularly at Tesla and SpaceX. In the past, the tech billionaire has appeared at Newsom’s side, touting expansions in the state. But the announcement of the planned moved to Texas marked a new low in their relationship.

After the announcement, the governor shared a screenshot of a 2022 post by former President Trump, who claimed that Musk so craved federal subsidies for Tesla and SpaceX that “I could have said, ‘drop to your knees and beg,’ and he would have done it.”

Newsom republished the comment on X, adding: : “You bent the knee.” Musk fired back: “You never get off your knees.” In another X post, the SpaceX boss added: “Gavin’s career is over.”

The governor’s press office posted a notice suggesting that Musk’s departures from California were only half-hearted. “The last time Elon Musk ‘moved’ an HQ, Tesla ended up expanding in California” with a new engineering center in Palo Alto. The governor’s camp said this was because of “our diverse, world-leading talent.”

For many years, the South African-born entrepreneur had a much more positive relationship with the Golden State. He joined San Carlos-based Tesla not long after its founding two decades ago. And in 2002 he used an El Segundo warehouse as the first headquarters of what would become SpaceX.

The Times reported in 2015 that three Musk companies — Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX — together had benefited from an estimated $4.9 billion in government support.

That figure was derived by totaling a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla could sell. It also included the tax credits and rebates available to consumers of solar panels and electric cars.

Early last year, Newsom said that Tesla had received $3.2 billion in government subsidies over the last two decades. He depicted the support as worthwhile in helping to promote cars that did not produce heat-trapping tailpipe emissions.

But Musk’s relationship with California leaders took a marked downturn during the COVID-19 pandemic.

Many businesses and public facilities closed down in 2020 in an attempt to prevent spread of the virus. That included a Tesla factory in the San Francisco Bay Area community of Fremont.

Musk called stay-at-home orders “fascist.” Tesla argued for keeping the plant open, saying that electric vehicles were essential to national security. Alameda County said no, arguing that the car company had not met the criteria for reopening.

Elon Musk has long sparred with California officials, while at the same time getting generous subsidies for his companies.

Echoing comments he would make four years later, Musk called that the “final straw,” and said he would move Tesla’s “future operations” to Texas and Nevada.

In response, then-Assemblywoman Gonzalez Fletcher lobbed a profanity at Musk via social media. She added: “California has highly subsidized a company that has always disregarded worker safety & well-being, has engaged in union busting & bullies public servants.”

Musk moved Tesla’s headquarters to Austin and suggested that the giant Fremont plant also might be closed. “If we even retain Fremont manufacturing activity at all,” he wrote on social media, “it will be dependent on how Tesla is treated in the future.”

The Fremont factory remains open today. Tesla’s website calls it “one of the largest manufacturing sites in California.”

Musk continued to rail against the state in 2022. Interviewed on a podcast, he acknowledged that most of his friends were in California. But he complained about the overbearing government and — in a shot about migration to other states — he dubbed Newsom the “U-Haul salesman of the year.”

Then, just last year, the tech magnate and the governor appeared on good terms as Tesla opened a new engineering headquarters in Palo Alto. Newsom praised Musk and boasted about the deep pool of engineering talent in the state. The two then bantered about how Newsom had been an early Tesla buyer.

But friction between California and Musk’s companies has never gone away.

A 2022 complaint from the state’s Department of Fair Employment and Housing alleges that Tesla’s Fremont plant amounts to a racially segregated workplace, with Black employees subjected to harassment and discrimination over job assignments, discipline and pay.

The state has also tried to crack down on Tesla’s claims that some of its cars are self-driving.

Elon Musk smiles with his arms spread wide.

The California Department of Motor Vehicles bans the advertisement of cars as “self-driving” when they are not. But when those rules went unenforced, the Legislature turned regulations against false advertising into a state law. That led, last year, to a formal accusation of deceptive marketing by the company.

Another conflict arose last year after the Legislature passed a law it said would make social media platforms more transparent. Assembly Bill 587 required X and other platforms to disclose their policies, including what content users are allowed to post and how they respond when the rules are violated.

In a lawsuit filed in federal court, X argued that the law violates the 1st Amendment’s free speech protections and would pressure social media companies to moderate “constitutionally protected” speech the state finds “undesirable or harmful.”

As for Musk’s latest public policy complaint, it has been previously reported that the billionaire blamed his estrangement from his transgender daughter on the schooling she received at Crossroads — the progressive K-12 school in Santa Monica.

The tech magnate continued to fume about the state law last week. “The goal of this diabolical law,” he wrote on X, “is to break the parent-child relationship and put the state in charge of your children.” In a subsequent interview with Jordan Peterson, a clinical psychologist and podcaster, he said he had been “tricked” into agreeing to his son taking puberty-blocking medication. Musk said his son — who transitioned to female — in effect had been “killed by the woke-mind virus.”

California leaders previously have rejected the notion that the state is to blame for friction between parents and children about gender issues. “Elon Musk is a textbook example of why kids shouldn’t be forced to come out to their parents,” state Sen. Scott Wiener wrote on X, before the Musk-Peterson interview.

Niedermeyer said that despite Musk’s frequent protests, the state has never been very aggressive about cracking down on his companies’ missteps . Still, he said he expects Musk to move the two headquarters to Texas.

But abandon California altogether?

Not so likely, Niedermeyer said, given the large investment Musk’s companies have in the state and the huge number of engineering and technical workers who live here.

“Having that talent is really important to a lot of the things they want to do,” said Niedermeyer. “And that talent is often already in California or wants to live in California.”

Elon Musk’s messy divorce with California leaves ugly grievances all around

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