Chief executive Elon Musk announced the move at the electric carmaker’s annual shareholders’ meeting in Austin.
He gave several reasons for the move, telling shareholders its Californian factory in Fremont was “jammed”. California was also a difficult place for his employees to find affordable housing, he told shareholders.
“There’s a limit to how big you can scale it in the Bay Area. In Austin our factory is like five minutes from the airport, 15 minutes from downtown,” he said.
The billionaire technology entrepreneur has had an fractious relationship at times with California.
California has stronger labour laws, and higher living costs and taxes than other states, while Texas is known for cheaper labour and less stringent regulation.
Mr Musk moved his home to Texas from California at the end of last year to focus on Tesla’s new car manufacturing plant there.
Tesla profit surge driven by record car deliveries –
The electric carmaker said it delivered a record 200,000 cars to customers in the same period. It added that public support for greener cars was greater than ever.
The company, led by billionaire entrepreneur Elon Musk, reported on Monday that profits soared off the back of strong sales.
Profits for the second three months of the year were $1.1bn, up from $104m last year, bolstered by sales of its cheaper Model 3 sedan and Model Y.