Tesla says it will relocate its headquarters from Palo Alto, California, to Austin, Texas, though the electric car maker will keep expanding its manufacturing capacity in the Golden State.
CEO Elon Musk gave no timeline for the move late Thursday when he addressed the company's shareholders at Tesla's annual meeting.
Musk noted that cost of housing in the Bay Area has made it tough for many people to become homeowners and that translates into long commutes. Last year, tech giant Oracle Corp. decided to move its headquarters from Silicon Valley to Austin, saying the move would give its employees more flexibility about where and how they work.
"We're taking it as far as possible, but there's a limit how big you can scale it in the Bay Area," he said. "Just to be clear, though, we will be continuing to expand our activities in California. This is not a matter of leaving California."
Musk stressed he plans to expand the company's factory in Fremont, California, where Tesla's Model S and Model X cars are built, in hopes of increasing its output by 50 per cent.
The announcement drew cheers and applause from a small audience at Tesla's manufacturing plant in Austin, where Musk delivered his remarks, which were webcast live.
Musk touted the company's record vehicle deliveries this year, while noting that global supply-chain disruptions that have led to a shortage of computer chips remain a challenge.
"It looks like we have a good chance of maintaining that into the future," he said. "Basically, if we get the chips, we can do it."
As a result, production of Tesla's angular Cybertruck pickup isn't likely to begin before the end of 2022, Musk said, estimating that the company would reach "volume" production on the vehicle in 2023.
"We should be through our severest supply chain shortages in '23," he said. "I'm optimistic that will be the case."
Tesla said last week that it delivered 241,300 electric vehicles in the third quarter even as it wrestled with the shortage of computer chips that has hit the entire auto industry.
The company's sales from July through September beat Wall Street estimates of 227,000 sales worldwide, according to data provider FactSet.
Third-quarter sales rose 72 per cent over the 140,000 deliveries Tesla made for the same period a year ago.
So far this year, Tesla has sold around 627,300 vehicles. That puts it on pace to soundly beat last year's total of 499,550.