Tesla’s move to Texas further mars ESG credentials

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MELBOURNE, Oct 8 (Reuters Breakingviews) - Texas is a strange place to put an electric-power champion these days, but Tesla (TSLA.O) boss Elon Musk isn’t exactly known for following convention. He just unveiled plans to relocate the company’s headquarters to Austin. The reasons provided don’t add up, and he probably isn’t escaping the government interference that irked him.

Musk threatened in May last year to up sticks from the Palo Alto area that has served as Tesla’s base since its founding in 2003. The rationale was California’s Covid-19 lockdowns that forced his factory to close, measures he called “fascist”.

Remarks at the annual meeting on Thursday avoided reprising the theme. Instead, Musk linked the decision read more to a lack of space and the cost of living in the Bay Area. Both are valid points, but more for factory workers than well-paid executives. And a head office needn’t be in the same place as what might become its biggest production facility.

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There are trade-offs, too. For one thing, Tesla will now be run from a state where its model of selling cars directly to consumers is banned by law as a way of protecting car dealerships. Any Texas residents buying a locally made Model 3 or other vehicle will have to wait until it’s shipped out of state and back first.

Moreover, Texas Governor Greg Abbott’s administration is building a weak track record in green energy. He was one of many right-wing politicians to falsely blame wind power for the state’s electricity generation failure read more in February. He has since pushed to prop up the fossil-fuel industry and load green energy up with more costs.

File photo: Elon Musk, the chief executive of Tesla Motor, speaks at the South by Southwest Interactive festival in Austin, Texas. REUTERS/Gerry Shih

Women’s rights also have suffered under Abbott. He recently signed a bill outlawing abortion after six weeks of pregnancy, a law now being challenged in the courts read more . Abbott has even implied that Musk supports such policies, though the Tesla boss has obliquely denied it.

These dubious policies are at odds with Tesla’s ambition. It already has faced criticism over how it treats workers, including losing a racism lawsuit read more this week. And it has long been blighted by weak corporate controls. Moving to Texas further mars Musk’s environmental, social and governance credentials, giving investors increasingly focused on such matters even more reasons to think twice.

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- Tesla Chief Executive Elon Musk said on Oct. 7 said the electric-car maker will move its headquarters to Austin from Palo Alto, California. He made the announcement at the company’s annual meeting, which was held at its manufacturing plant under construction in the Texas capital.

- Tesla has been based in California since it was founded in 2003 by Martin Eberhard and Marc Tarpenning.

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Editing by Jeffrey Goldfarb and Katrina Hamlin

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