Texas becomes Tesla’s new China

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Elon Musk arrives at the In America: An Anthology of Fashion themed Met Gala at the Metropolitan Museum of Art in New York City, New York, U.S., May 2, 2022.

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WASHINGTON, June 29 (Reuters Breakingviews) - China’s President Xi Jinping and Texas’s Governor Greg Abbott have but one thing in common: their relationship with Tesla’s (TSLA.O) Chief Executive Elon Musk. The U.S. state has been good to the electric-car maker, much like the People’s Republic. Musk, who has also made a play for social media firm Twitter (TWTR.N), will likely remain a dutiful friend of both.

Texas offered an escape for Musk and his company when Covid-19-related lockdowns in Tesla’s former home state of California became too overbearing for his taste. In December last year, the company transferred its headquarters to Austin. There were other perks he gained with the move. Unlike California, the Lone Star also has no individual or corporate income tax. And in addition to the standard business benefits, local authorities also offered Tesla about $65 million in tax breaks and other incentives in 2020 for a new factory.

China has been a similar safe haven for Musk and his company. Tesla’s first Asian production facility is there. Shanghai has imposed a 15% tax rate through next year, which is far less than China’s typical rate of 25%. The carmaker relies on the region for about half of its total production and around 25% of sales.

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In return Musk has shown loyalty to Beijing read more . Last year, Nike (NKE.N), H&M (HMb.ST) and Calvin Klein were among the brands that faced boycotts in the People’s Republic after expressing concern over alleged forced labor involving Uyghur Muslims. But Musk went in the other direction, opening up a showroom in Xinjiang province.

For now Texas seems to continue working to keep Musk happy. Attorney General Ken Paxton is launching a probe into whether Twitter reported false data about bots in its user makeup. That’s a gripe Musk has used to try to back out read more of a $44 billion deal to buy the social network.

Abbott has blasted the likes of Twitter for censorship, but if the company lands under Musk’s control, he’ll have lots of sway over who and what goes on the platform. Tesla’s policy to help employees end a pregnancy in another state is at odds with goals of some Texas officials, who celebrated the demise read more of federal abortion rights. Musk may soon be getting enough out of his relationship with Texas that he could tip his cowboy hat to the state on both fronts.

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Texas Attorney General Ken Paxton said on June 24 that starting that day, abortion providers could be criminally liable for performing the procedure. He made his comment after the U.S. Supreme Court overturned the 1973 Roe vs. Wade ruling that had legalized abortion nationwide. In relation to that decision, several state Republican lawmakers are working on a plan to punish companies that help their employees get the procedure in another state.

Electric-car maker Tesla is one of several companies that have policies to provide financial assistance for travel and lodging to employees seeking healthcare services unavailable in their home state. The company moved its headquarters from California to Texas in 2021.

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Editing by Lauren Silva Laughlin and Sharon Lam

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