What a Blue Texas Means for Elon Musk’s Empire

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0:14Welcome to Tech News Briefing. It's Monday, November 9th. I'm Julie Chang for The Wall Street Journal. The world's richest person was hoping for a different outcome this election season, especially in Texas. Elon Musk was betting heavily on keeping the Lone Star State red. Instead, Texas flipped blue. It is a historic morning in Texas. The state turned blue overnight with Democrats sweeping elections. Huge moment for Democrats in the state of Texas. For how long have they been trying to turn Texas blue tonight? Gina Hinojosa makes history the daughter of a long time. So what does this political shift mean for the future of Musk's vast business empire in Texas?

0:57and the rest of the U.S.? Here to break that down for us is WSJ reporter Becky Peterson. So Becky, let's start from the beginning here. Why did Elon Musk initially go to Texas? Texas in general is just an easier place to build stuff. And that was one of his biggest problems with California. It's the permitting and sort of the scrutiny that he faced while trying to do these really big projects. So Musk moved in 2020 during the coronavirus lockdowns. He was really frustrated with the restrictions in the state and pushed back on them pretty heavily. So he was like, fine, you don't want me to run my factories in California.

1:40I'll leave. What other moves has Tesla made in Texas since then? Musk has really expanded his entire empire across the state. Tesla has its biggest U.S. factory in Austin. It's called Giga Texas. And it's this giant facility that's sort of a combination headquarters and manufacturing facility for its vehicles. And he's also expanding that. They're building a new factory for humanoid robots. They have a data center there that they're expanding. And then in the nearby Bastrop County, he has the Boring Company. He has a SpaceX facility, and he's also moved Neuralink to an area near Austin as well.

2:24Gotcha. Let's dive into SpaceX a bit. What's its presence in Texas like? SpaceX is the first company actually that moved to Texas. They rented some facilities in the middle of the state for rocket development. And then in 2014, they broke ground on their Starbase rocket factory and launch facility, which is in the southernmost tip of the state. And since then, they've expanded and they actually incorporated their own city down there called Starbase, which has a SpaceX executive as mayor. So it sounds like there's a lot going on in Texas already. What about Musk's future plans there? He has tens of millions of dollars in factory space planned for different projects.

3:10The biggest one that's on the books is called TerraFab, and that's in Grimes County, which is a new part of the state for him. There, SpaceX and Tesla have a joint venture where they're planning to build this chip development facility and spend billions of dollars in the process. Now, there's other projects elsewhere. They also plan to build a solar parts factory. So how is Musk's presence or his company's presence or all those projects being received by the public in Texas? Between Tesla and SpaceX, Musk has been a huge job creator and developer in Texas. So the state has benefited in many ways.

3:50These are really high paying jobs in Austin. In Grimes County, when I spoke to local officials, they were just talking about how this project was going to really like raise the average salary in the area. They said they had never seen salaries like that in proposals. And so there is some extent to which the state wants to keep Musk happy because he's investing a ton. At the same time, there's concerns, especially from Democrats, that he has just gotten rubber stamps from the state and has been able to push through these big infrastructure projects without any opposition because the counties that he's interacting with don't really have the resources to negotiate better deals.

4:29So they're offering up big tax abatements and infrastructure incentives for him to build, but they aren't necessarily getting much in the process. What questions do you have about the impact the midterms will have on tech? If you're a listener on Spotify, let us know. Coming up, what a blue Texas means for Elon Musk's growing empire. That's after the break.

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5:16Welcome back. We've been discussing why Elon Musk made a big bet on Texas, moving Tesla there in 2020. Okay, so zooming ahead, Becky, the midterm election nears and the Journal reported that Musk put$500 million into Republican candidates this election cycle. Generally speaking, why did he support these candidates? So Musk appears to have poured more than$160 million to support Ken Paxson's Senate race in Texas. And Musk has obviously supported President Trump and put a ton of money into Republican races on a federal level. And there he often gets involved in these culture war issues. But on a state level, really, it's very practical for him because he wants an ease of permitting and he wants to be in a state that's going to make it easier for him to do business.

6:08But it's also just part of this broader push for him. He posts that he thinks the fate of the nation depends on Republicans winning. He really puts it in these grandiose terms. But when you're on the ground in Texas at the end of the day, he really just needs elected representatives that are going to make it easy for him to do business. Okay, so the Democrats swept the midterms in Texas and elsewhere. In the gubernatorial race, Gina Hinojosa ousted Republican incumbent Greg Abbott. How will a blue Texas change things for Musk? And we should just note, we reached out to Tesla and SpaceX, and they didn't return our requests for comment.

6:49Texas hasn't really had Democrats in office for a very long time. So Musk hasn't had to negotiate with them. We see after the election, Musk has been reposting arguments that say like, oh, well, the governor elect isn't actually going to be that hard on business because she talks about slowing data centers, but she's not actually going to stop permitted projects. And you see him conceding a little bit. But in September, SpaceX got approval from a federal judge to move forward on this land swap with the Trump administration. That's for 700 acres of land in what is a federal wildlife refuge. And on the state level, the state was looking into selling part of Boca Chica State Park to SpaceX until the governor-elect intervened.

7:37She campaigned on opposing that land sale. And in a press conference on Thursday, she said that she had asked them to delay discussing it until she had taken office. This morning, I was pleased to talk to the executive director of Texas Parks and Wildlife to confirm that this issue was not on today's agenda and to request that no action be taken in respect out of this transition. At the end of the day, he is going to have to work with whoever's in office. So while he might have tried to swing the election in favor of Republicans, now it's in his best interest to find a way to work with them. Has Musk given any indication that he might move somewhere else?

8:20It would be a lot of work for Musk to relocate at this point. But he is in other states. XAI, the SpaceX data center facilities, those are in Tennessee and Mississippi. And, you know, he still has a huge footprint in California, despite his insistence that he doesn't live there and doesn't do business there. that's still where a lot of Tesla and SpaceX work gets done. It's where the engineers are. It's where the AI is happening. He's also in Florida. I mean, he's everywhere. We did a map of this a few weeks ago, and really what we saw was that he was taking over the Sun Belt. So he has an empire that extends from Florida through Texas and over to California.

9:04So while it's very concentrated in Texas right now, really his concerns are national. Elon Musk obviously was very involved in the 2024 presidential election. He spent a lot of money this cycle with a different result. Do you expect he'll continue his involvement in politics or does he have a limit? He already hit his limit before and then ended up donating a ton during this election cycle. But will the White House still want him there? Will Republicans still want him if it is shown that he can't help win elections? that's a question that I have. Becky, as you keep following Musk and his companies and his growing empire, what will you be watching for going forward?

9:48Well, it's easy to forget with the election news, but just a couple of weeks ago, Musk said that Tesla and SpaceX were discussing a merger. And if that went through, it would be north of$3 trillion, a giant merger. They're going to need support. federally. They're going to need support on a state level. They get sued. It's going to go to court in Texas. You know, this is really, I think, what it's all about is trying to have government officials who will let him merge the companies and who will let him reorganize things as he sees fit. That was Journal reporter Becky Peterson. And that's it for Tech News Briefing.

10:32If you're a listener on Spotify, be sure to leave us a comment. Today's show was produced by me, Julie Chang, with supervising producer Katie Ferguson. We'll be back tomorrow with a new episode. Thanks for listening.

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