Elon Musk meets with California Governor Newsom at Tesla headquarters

Tesla CEO Elon Musk and his security detail depart from the company’s local Washington office on January 27, 2023.

Jonathan Ernest | Reuters

Tesla CEO Elon Musk and his staff will meet with California Governor Gavin Newsom on Wednesday and tour Tesla’s new tech headquarters. Sources close to the governor told CNBC that the meeting at Tesla’s engineering office in Palo Alto, California, dubbed HQ2, is expected to focus on the company’s efforts to create jobs and expand in the state.

The expansion will focus on hiring engineers skilled in research development and artificial intelligence. Tesla will take over the lease of the office space previously occupied by Hewlett-Packard. The plans will help accelerate efforts to produce autonomous driving and robotic technology.

Tesla kicked off the meeting after several previous attempts to spark talks between the state’s most well-known politician and the most outspoken billionaire failed.

It comes as Tesla faces regulatory scrutiny in the state. The California Department of Motor Vehicles has formally charged Tesla with deceptive marketing and advertising practices related to its driver assistance programs, the Autopilot and Full Self-Diving brand names. And the state civil rights office has sued Tesla for racial harassment and discrimination against black workers that has persisted for years at the company’s auto assembly plant and other California facilities.

Meanwhile, according to Tesla’s most recent annual financial filing with the SEC, prosecutors in several California counties are “investigating Tesla’s waste segregation practices,” alleging code violations for hazardous waste.

Tesla did not immediately respond to a request for comment.

California and its powerful climate initiatives have been integral to Tesla’s success. California leads the nation’s zero-emission vehicle market with nearly 1.4 million ZEVs sold and is home to 55 ZEV-related manufacturing companies.

But Musk’s views on California haven’t been so kind when it comes to his business.

When the pandemic hit in March 2020, Musk and state officials fell out over reopening the Tesla factory in Fremont, California. At the time, Musk urged his employees to return to work as covid hit businesses across the country. Musk falsely characterized California’s health-related covid restrictions as “fascist.”

In 2021, after repeated threats to leave the state, Musk moved Tesla’s headquarters to Austin, Texas. The company owns and operates two Megafactories in Fremont and Lathrop, Texas.

Since then, Musk has made his political stance clear, characterizing California as a one-party state weighed down by over-regulation and high taxes. Despite those comments, Governor Newsom praised Musk in multiple interviews with CNBC, calling him “one of the greatest innovators of our time.”

Musk, meanwhile, has emphasized that Tesla is still a major employer in the state and is expanding its business. For example, in the fourth quarter of 2022, Tesla boasted about a new Megapack factory in Lathrop, California.

Tesla said it had 47,000 employees in California by 2022, according to a January 2023 blog post. As of December 31, 2022, the company and its subsidiaries had 127,855 employees worldwide. The company said its wages resulted in $16.6 billion in economic activity for the state “or $44.4 million injected into California’s economy every day.”

CNBC’s Lora Kolodny contributed to this report.


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