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Comment by boringg | Hacker News Reader

It's unfortunate that Elon is leaving California given that the state has really lifted him to the pedestal he is on - through the talent network (highly talented employees, VCs), and the progressive policies that CA built for clean technology (Solar, EVs, Energy Storage). That was paid for on the backs of the people. Funny how short his memory is.

Elon is a talented man - I absolutely respect what he's done. However - let's call this what it is - he doesn't want to pay a large tax bill for the success that he has had (hence selling all property in CA). I get it - it sucks and you can also be much more anti-union in Texas.

Too bad he had to go along with the narrative “I think we’ll see some reduction in the influence of Silicon Valley” -- feels like a slap in the face to the market that lifted Tesla off the ground.

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I think you're attributing too much credit to California.

> Highly talented employees

The vast majority of Tesla's "talented" employees came from out of state. Regardless of that, I don't understand the perspective that employment is an act of "taking from the state". Tesla pays above-market salaries. Isn't it, then, more accurate to view employment as Tesla giving back/helping to the community?

> Progressive policies that CA built for clean technology

I assume the policies you're referencing are the tax credits for solar installation and EV purchases. Aren't these credits independent of where the company is located? If so, Tesla would have been able to take advantage regardless of their location.

> Let's call this what it is - he doesn't want to pay a large tax bill for the success that he has had (hence selling all property in CA)

It seems reasonable to assume that his tax bill and California policies were both factors in his decision to move. What makes you so confident that the tax bill is the primary factor? Do you have some inside knowledge? If I were in his shoes, I'd be optimizing for Tesla's success, not my personal taxes. He's already wildly rich, and it's pretty clear to me that he's not doing this for the money.

(1) Tesla actually used to pay below market rate (bay area) and had incredibly demanding working conditions (see drive from Elon carries through the company and that it was a mission based company) for a good period of time. I'm not saying thats good or bad just that they weren't paying above-market. Not sure what the calculus is now that the equity value has gone right off the charts. (2) No you get additional benefits for being in-state manufacturers. (I think its 10% vs 30% in state off capital costs). Referring to in-state policies not the federal ITC tax credit. (3) Not that he would want to spend that money on himself but he would want to put that capital to good use elsewhere. If he doesn't believe the state to be a good deployer of capital he probably doesn't want to give them a large portion of capital at his expense. Less about himself spending lavishly then putting his hard earned capital to waste (one way of looking at it).

> No you get additional benefits for being in-state manufacturers. (I think its 10% vs 30% in state off capital costs).

Can you link me to a source that explains the additional benefits that in-state EV manufacturers accrue? Thanks!

I'm talking solar and storage in this case. See CPUC's SGIP program (https://www.cpuc.ca.gov/sgip/).

Got it. After looking into the details, it seems like Tesla received around ~$111M of additional benefit from SGIP due to being in-state. $111M isn't nothing, but I'm doubtful this is a big factor in Tesla's success.

In-state incentive explanation: https://energycenter.org/sites/default/files/docs/nav/buildi...

SGIP program budget here: https://www.selfgenca.com/budget_public/program_level_summar...

In total, SGIP has issued $841M of incentives. SolarCity's market share is ~20%. The in-state incentive grants an additional 20%. $841M * .2 *.66 = 111M

There’s a bunch of other programs as well. I think la times did a write up in the past. There’s the california solar initiative, an california ev program as well. Would love to have the time to run this all down for you but frankly kids + life in general doesn’t allow for that...

Edit: not the best source but has some of the govt programs www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html%3f_amp=true

I find it tough to imagine Tesla pulling off its trajectory in any other state from the early days. He’s had some good tailwinds from the state until this spring.

> It's unfortunate that Elon is leaving California given that the state has really lifted him to the pedestal he is on ... That was paid for on the backs of the people. Funny how short his memory is.

It would be great if he recognized this when deciding where to establish future production/design centers. But as an individual, I don't think he owes any state or government an allegiance. If you had found career success in New York State, would you feel any obligation to NYS if you had family or a new opportunity in California? I should think not. Nor should Musk.

It is interesting that Tesla is expanding with a new factory in Texas and that could be a big factor in his move. Regardless, it's up to him where he wants to live.

> he doesn't want to pay a large tax bill for the success that he has had (hence selling all property in CA).

I like to think I'm pretty progressive and the wealthy should definitely have a significant tax obligation. But if he has been taxed on his wealth up until now, why would he continue to owe California? If he wanted to leave California on terms that you would find more legitimate, how long would he have to stay or how much would he owe to leave?

> leaving California given that the state has really lifted him to the pedestal he is on.... That was paid for on the backs of the people. Funny how short his memory is....he doesn't want to pay a large tax bill for the success that he has had (hence selling all property in CA).

Genuine question, not trying to be snarky.

I grew up in Australia, which educated, housed and fed me very well, and turned me into a successful Engineer. I decided I wanted to live in the snowy mountains of Canada, so I moved here.

At what point is a person like myself (or Musk) free to move wherever they want? How long to I owe an obligation to Australia for what they helped me with?

Clearly what myself and Elon are doing is perfectly legal, so it sounds like you have a moral objection to what we're doing. Do you think morally everyone should stay in the same district they were born, paying off their "debt" from being raised?

I don't understand what you're trying to say here.

I wouldn’t give California’s government any credit for Tesla’s success so far. If it was so good then Tesla wouldn’t be the only car company doing so well.

I know it's tough for free market people to understand this but it can't be understated. California SUPPORTS AND BUILDS the nascent market space from subsidizing Solar, Energy Storage and yes Electric Vehicles. I know it isn't cool to defend the government they are the ultimate boogeyman but like FFS they provide so many critical parts of our economy and, in progressive states like CA, help nascent industries get a footing. Without them, frankly, Tesla and SolarCity wouldn't be where they are. Prove me wrong with intelligible arguments.

""It’s hard to find a total dollar amount of California’s subsidies for Tesla, but the subsidies have been thick and fast. Until this year, the state government covered $7,500 of every Tesla bought in the state. The Tesla factory applied for and qualified for plenty of tax breaks.

Early on, it got $612 million in tax breaks from California, according to Green Car Reports.

The federal government also subsidized the factory in question. Musk was a major donor to and fundraiser for Barack Obama. Obama’s administration issued a $465 million loan to help Musk’s company, Tesla, build the Fremont factory that would build components for all-electric cars. (Tesla has since repaid the loan, according to the Energy Department.)"".

> state government covered $7,500 of every Tesla bought in the state.

This was a general subsidy for every car maker, regardless of location.

> Obama’s administration...

Was also not California specific.

$7500 was a federal subsidy. Had nothing to do with state.

>I wouldn’t give California’s government any credit for Tesla’s success so far.

Tesla was (and remains) a financial basket-case, that in Musk's own words brushed with bankruptcy a few times, and yet the billions of dollars the California government threw at Tesla over a decade didn't help them?

California has a country-wide monopoly on weather conditions that many people consider ideal. This attracts people, which raises prices, which results in a proportionally better talent network, as higher income professions are better represented. It's hard to give the government much credit for that.

Also, Elon has been paying taxes there for how many decades? Is he forever indebted to stay there now? Ridiculous.

If I'm not mistaken Texas has pursued large investments into clean energy, outranking California in terms of wind energy and adding solar at a very fast scale: https://www.forbes.com/sites/joshuarhodes/2020/09/25/even-re....

I see it the other way around. Musk's success and impact are of of truly historic proportions, and his being in California helped lift its credibility and reputation. It's sad for California to lose him (and the loss of his businesses to the extent that will happen).

It's odd to me to be so aligned with the State to claim it is responsible for one's success, without accounting for the jobs he created, and the related industries he energized. California benefits from people like Musk. As more companies and thought leaders leave (as they should given the direction of CA's policies), the state will suffer.

Things are very different in Silicon Valley and in California now from the 90's when Musk was on the team that started Paypal.

I think he might not want to be in the NEW California and Silicon Valley.

I could spend a lot of time doing research and trying to figure out why... but things have changed somehow.

I think the mass exodus of people from California kind of supports his decision.

I think California has a negative growth rate last time I checked.

Things change - I don't disagree. Things can't always been boom times. California has had a pretty strong push since the 80s frankly with the telecom bust in early 2000s.

I would say the cost of living has escalated significantly, the companies that can afford to thrive in the bay area are not hardware startups as VC money has a difficult time support most of their higher capital costs, longer growth cycles and lower multiples on return. The pressure to succeed and level of talent is incredibly competitive. Therefore a lot of the software companies have taken over which is a different demo of people.

Don't believe the narrative on mass exodus - thats a signal that is being amplified in the press. Exodus? Yes, will it come back when we are not in pandemic? I would wager yes.

Is it time for some people to move out of state especially those who don't or never liked it? Yes, take the pressure off our public systems.

You're right I stand corrected.

Ignoring the Covid exodus, California had a .1% growth rate, which is in the lower half of all 50 states growth rate.

Texas has the number one growth rate in the country.

Isn't Musk in LA?

He and his companies are all over.

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