Tesla CEO Elon Musk and his security detail leave the company’s local office in Washington on January 27, 2023.
Jonathan Ernst | Reuters
Tesla CEO Elon Musk and his staff will meet Wednesday with California Governor Gavin Newsom and tour Tesla’s new engineering headquarters. Sources close to the governor told CNBC that the meeting at Tesla’s engineering office in Palo Alto, Calif., known as 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 takes over the lease for the office space, which was previously occupied by Hewlett-Packard. The plans will help accelerate efforts to produce autonomous driving and robotics technology.
Sources said Musk initiated the meeting after several previous attempts to set up talks between the state’s best-known politician and the most outspoken billionaire failed.
It comes as Tesla faces regulatory review in the state. The California Department of Motor Vehicles has formally accused Tesla of engaging in misleading marketing and advertising regarding its brand-name Autopilot and Full Self-Diving driver assistance programs. And the state civil rights office has sued Tesla alleging racial harassment and discrimination against black workers that has gone on for years at the company’s auto assembly plant and other facilities in California.
Meanwhile, according to Tesla’s latest annual financials filing with the SECdistrict attorneys in various California counties “are conducting an investigation into Tesla’s waste segregation practices,” for violations of the hazardous waste code.
Tesla did not immediately respond to a request for comment.
California and its strong climate initiatives have been crucial 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 view of California hasn’t been so kind when it comes to his business.
When the pandemic hit in March 2020, Musk and government officials clashed reopening of the Tesla factory in Fremont, California. At the time, Musk was pushing for his employees to return to work as covid affected businesses across the country. Musk mischaracterized 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 burdened with overregulation and high taxes. Despite these comments, Governor Newsom has praised Musk in several interviews with CNBCcalling him “one of the greatest innovators of our time.”
Musk, meanwhile, has emphasized that Tesla remains a major employer in the state and is expanding its operations. During the fourth quarter of 2022, e.g. Tesla boasted about a new Megapack plant in Lathrop, California.
Tesla said it had 47,000 employees in California by 2022, according to a January 2023 blog posts. As of December 31, 2022, the company and its subsidiaries had 127,855 employees worldwide. The company said its payroll resulted in $16.6 billion in economic activity for the state “or $44.4 million injected into the California economy every day.”
CNBC’s Lora Kolodny contributed to this report.