By Dhirendra Tripathi

Investing.com – Tesla stock (NASDAQ:) traded 0.7% lower in Friday’s premarket as the market absorbed CEO Elon Musk’s decision to move the company’s headquarters to Texas from California.

It plans to remain a major presence in California as well as increase the production of its Fremont facility.

Tesla even held its 2021 annual meeting of stockholders at its Gigafactory in Austin, Texas’s capital, on Thursday. Management cited two reasons why the company made this decision. Management cited two main reasons for moving. One, there was limited expansion potential at Fremont’s Fremont plant. Two, California’s high cost and long travel distances meant that Californians couldn’t afford to live in California. 

Last year, the company ran into numerous problems with state regulators as it attempted to maintain Fremont’s factory open while defying state decrees regarding social distancing. Musk, who had previously relocated from Musk in Texas to work, called Texas’ health regulations ‘fascists’ during an earnings call. 

This electric vehicle manufacturer joins an increasing number of other companies that have left California. These include Oracle (NYSE :), HPE, Toyota and others.  

According to StreetInsider, Wedbush’s Dan Ives believes the move is Tesla’s first step towards making Austin its domestic and global hub.

Texas is a significant beneficiary of California’s exit. 

“The Lone Star State is the land of opportunity and innovation,” Texas Governor Greg Abbott tweeted, welcoming Musk and his company.