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Texas is the new China for Elon Musk


Beijing and the southern state have rolled out their red carpet for Tesla and the tycoon repays them for it

Chinese President Xi Jinping and Texas Governor Greg Abbott have only one thing in common: their relationship with Elon Musk, the CEO of Tesla.

The North American State has behaved well with the electric car manufacturer, as has the People's Republic.

Musk, who has also launched into the popular social network Twitter, will probably remain a helpful friend of both.

Texas offered an escape route for Musk and his company when the COVID-19 lockdowns in the former Tesla state of California became too demanding for their liking.

In December of last year, the company moved its headquarters to Austin.

The move brought him other advantages.

Unlike California, the Lone Star State has no personal or corporate income tax.

And in addition to the usual business perks, local Texas authorities also offered Tesla some $65 million in tax breaks and other incentives in 2020 to build a new factory.

China has provided a similar haven for Musk and his company.

Tesla's first Asian production plant is located there.

Shanghai has set a tax rate of 15% until next year, which is much lower than the usual rate of 25% in China.

The automaker depends on the region as it generates about half of its total production there and achieves around 25% of the global sales of the entire group.

In return, Musk has shown his loyalty to Beijing.

Last year, Nike, H&M and Calvin Klein were among the brands boycotted in the People's Republic after raising concerns about alleged forced labor of Uyghur Muslims.

But Musk went in the other direction, opening a dealership in Xinjiang province.


For now, Texas seems to be still trying to keep Musk happy.

Attorney General Ken Paxton is launching an investigation into whether Twitter provided false data about bots in its user pool.

That's a complaint the world's richest man has used to try to back out of a $44 billion deal to buy the social network.

Governor Abbott has criticized the censorship of Twitter and other similar networks, but if the company comes under Musk's control, he will have a lot of influence over who and what appears on the platform.

Tesla's policy of helping employees terminate their pregnancies in another state clashes with the goals of some Texas officials, who have celebrated the elimination of the federal right to abortion.

Musk may soon profit enough from his relationship with Texas to tip his cowboy hat to the state on both fronts.



The authors are columnists for Reuters Breakingviews.

The opinions are yours.

The translation is the responsibility of EL PAÍS.

Source: elparis

All business articles on 2022-07-03

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