When Elon Musk announced in July 2024 that SpaceX and X would move their headquarters out of California, he said the “final straw” was a new law barring schools from being required to notify parents that their child identifies as transgender.
“Because of this law and the many others that preceded it, attacking both families and companies, SpaceX will now move its HQ from Hawthorne, California, to Starbase, Texas,” Musk wrote to his 54 million followers on X, drawing an enthusiastic response.
His message was unmistakable: he was abandoning California’s progressive politics and high-regulation environment for what he viewed as the conservative, business-friendly promise of Texas. The Golden State, he implied, would eventually regret driving away the world’s richest man and his trillion-dollar companies.
Yet the move has not unfolded quite as Musk expected. His new Texas senator, James Talarico, holds strong views on transgender issues of his own. Talarico has said that “God is nonbinary” and, despite recently softening his position, previously opposed restrictions on transgender athletes competing in girls’ sports.
Musk left one state governed by Democrats only to find himself surrounded by Democrats preparing to take power in another. Those incoming leaders are unlikely to show much sympathy toward one of their most vocal political opponents.
Texas ended three decades of Republican control in this week’s midterms, electing its first Democratic governor, Gina Hinojosa, in more than 30 years. Talarico also flipped a Senate seat for the Democrats for the first time since 1988. In that light, Musk’s decision to relocate himself and his companies to Texas in a display of Republican conviction appears badly timed.
Some observers are now asking whether Musk could emerge as one of the election’s biggest losers.
His conservative refuge has suddenly become, at least for now, a Democratic stronghold. At the same time, a sell-off in technology stocks two days after the election wiped billions from his fortune, while Democrats in Washington have signaled that he ranks high among the figures they want to investigate.
Elon Musk left a state run by Democrats and now finds himself surrounded by Democrats preparing to govern Texas
Musk moved himself and his companies to Texas as part of a broader break with Democratic politics
His conservative promised land has become a Democratic stronghold, while the technology sell-off cost him billions
The market reaction was striking. SpaceX shares fell 5.5 percent, while Tesla, another company valued above $1 trillion, dropped 5.1 percent after the election shock, even as broader markets moved in the opposite direction.
Musk could hardly claim he had not anticipated the political risk. The billionaire owner of Tesla, X and SpaceX spent almost half a billion dollars supporting Republican candidates. Of that total, $224 million went toward races in Texas, much of it backing Ken Paxton, Talarico’s ultimately unsuccessful and unpopular opponent.
On election day, Musk urged his vast X audience to vote Republican, though he later removed the post.
The midterms could become both a commercial and personal crisis for Musk, who has spent years provoking Democrats and was Donald Trump’s largest campaign donor in 2024.
People familiar with senior Democratic thinking in Washington told the Daily Mail that there is little enthusiasm for repairing relations with Musk.
“They view him as a class traitor,” one source said. “Elon was once their green hero for pioneering electric cars and leading the charge to reduce fossil fuels, and he betrayed them… They want to make him hurt.”
Still, money can change political calculations. Musk, whose fortune has been estimated at as much as $865 billion, might eventually be able to purchase a route back into Democratic favor, some believe.
The party faces a major fundraising challenge, while Musk’s political record is less consistently conservative than his recent rhetoric suggests. He donated to Barack Obama’s campaigns and supported Hillary Clinton in the 2016 presidential election.
“I could absolutely see Elon donating to Democrats again, depending on their outreach,” another insider said. “He could readily return to a more favorable position if they are willing to work with him.”
For now, however, there is little evidence of a thaw between Musk and the Democratic Party.
“Data centers in space looking pretty appealing right now,” Musk wrote sarcastically on X early Wednesday as the scale of the Republican defeat became apparent.
“Guess my election-interfering space lasers didn’t work this time,” he added minutes later, referring to unsubstantiated claims that he had interfered in Trump’s successful 2024 campaign.
After his ill-fated stint in the Trump administration last year, Musk had largely retreated from the political spotlight. Waving a chainsaw, he led the chaotic Department of Government Efficiency, or DOGE, which eliminated the jobs of roughly 300,000 federal workers while doing little to reduce government spending.
Musk has spent years provoking Democrats and was Trump’s biggest campaign donor in 2024
Musk’s turbulent role in the Trump administration included leading the controversial DOGE initiative
The DOGE episode, which Musk described in an interview last December as “a little successful,” triggered anti-Tesla demonstrations across the United States and Europe. Some protests escalated to the point that vehicles were set on fire.
Musk may eventually discover that doing business in low Earth orbit is easier than operating in Texas. The entrepreneur who dreams of colonizing Mars might even consider getting there ahead of schedule.
That prospect remains unlikely. Musk has been establishing deep roots in Texas since 2020, when frustration with Covid-19 restrictions at Tesla’s California plant prompted him to announce the company’s headquarters would move to the state.
He relocated there personally as well, settling in Austin. Musk described the capital as a “mini-California”—apparently as a compliment—and predicted it would become “the biggest boomtown that America has seen in a half-century.”
The billionaire, who has fathered at least 14 children with four women, built an elaborate compound in an Austin gated community. The arrangement allowed him to house several of his children and their mothers in separate but neighboring properties.
The adjoining residences, purchased discreetly by Musk for a combined $35 million, include a 14,400-square-foot Tuscan-style villa and a six-bedroom mansion. When he is in Austin, he stays at a third mansion roughly a 10-minute walk away.
Texas has also become central to Musk’s commercial ambitions—and to his vision of expanding humanity into space.
Tesla operates its largest US vehicle plant outside Austin, while SpaceX launches rockets from its Starbase facility at Boca Chica in southeastern Texas, near Brownsville. The rockets are manufactured in the state as well, at a site in Bastrop County.
Together, Musk’s companies employ more than 20,000 people across Texas.
Another 3,000 jobs were expected to be created through a planned $16.8 billion Terafab chip plant. SpaceX said Texas was chosen for the facility because of its “business-friendly climate.”
That enormous investment could help Musk retain some political goodwill.
“There’s no way Democrats want to completely crush Elon in Texas,” a Texas political strategist told the Daily Mail. “He employs tens of thousands of people in Texas. He built an entire city there.”
Even so, sources say Musk will no longer have the unrestricted access and political advantages he enjoyed under business-friendly Republican Governor Greg Abbott.
The Terafab project received $30 million in state funding. SpaceX says the proposed facility will eventually contain more than 100 million square feet of manufacturing space.
The chip plant is expected to play a central role in Musk’s plans to expand the artificial-intelligence arm of his business empire.
Those ambitions depend heavily on government cooperation. AI facilities require huge amounts of electricity and water, as well as a permissive regulatory environment for environmental approvals and tax incentives.
Until now, Musk has received much of what he sought in Texas. Trump was supportive of AI, and Musk maintained a close relationship with Abbott. In 2020, Abbott promised Musk “more freedom where he could expand the way he wanted to expand.” He later called him “the leading visionary of our time.”
Incoming Democratic Governor Gina Hinojosa is unlikely to offer such praise. She shares her party’s skepticism toward AI and the ultra-wealthy Silicon Valley executives driving its rapid development.
Trump’s support for artificial intelligence helped create a favorable environment for Musk
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Musk is unlikely to retain the same access and political advantages he enjoyed under Texas Republicans
Hinojosa campaigned against generous corporate subsidies—and against Musk personally.
Last month, she sued to obtain emails exchanged between Musk and Abbott, accusing the governor of putting Texas interests second by offering the billionaire favorable deals. She also alleged that Musk’s companies received $1.7 billion in state property-tax breaks after he made a substantial donation to Abbott’s re-election campaign.
Hinojosa did not name Musk during her victory speech Tuesday night. Like other Democratic politicians, however, she directed her criticism at billionaires.
“Does Texas belong to the people of Texas, or is this the billionaires’ world and we just live in it?” she asked, prompting loud cheers from the crowd.
She promised to take power away from the “powerful people who have gotten very comfortable running this state.” The target of that message seemed clear.
Talarico likewise criticized Musk without mentioning him by name. “We must get big money out of our politics, so no billionaire or trillionaire can buy our elections,” he said. “We must unrig this economic system that only benefits the top 1 percent.” There is currently only one trillionaire in the United States.
Asked by Politico whether Congress should investigate Musk, Talarico replied that “obviously, there needs to be accountability for any wrongdoing.”
He added that a more effective solution would be “getting big money out of our politics, banning corporate PACs, banning super PACs, so billionaires and trillionaires can’t buy our elections.”
Talarico may be choosing his words carefully rather than openly attacking one of Texas’s most powerful employers. But there is little affection between the two men.
During the campaign, Musk repeatedly attacked Talarico on social media. He called the Democrat a “far-left extremist,” “pure evil” and “a creep.”
Musk also claimed Talarico would “abolish democracy,” “open the borders” and “vote to trans your kids.”
“There is something deeply wrong with Talarico,” Musk wrote ominously.
Talarico largely avoided responding in kind, but accused Musk of trying to buy Texas. He told voters: “Elon Musk wants our land, he wants our water, he wants our taxpayer dollars and he wants his very own personal United States senator.”
With the young Democrat defeating Paxton by more than 12 percentage points, Musk appears to have emerged from the contest with a weaker reputation among many Texans than he had beforehand.
Democratic state Senator Nathan Johnson, who is set to become Texas attorney general, offered a measure of the hostility Musk now faces. Speaking to NBC on Wednesday, Johnson described him as a “cruel, arrogant, ignorant” figure who had “demonstrated his disregard for the public interest.”
Johnson said he would not give Musk the latitude he enjoyed under the outgoing Republican administration. He has already announced plans to examine whether SpaceX improperly benefited from a state grant program intended to expand rural broadband.
“I don’t have a hit list,” Johnson said, “but I show no deference to a guy who has gone to great lengths to control the government and do enormous damage globally.”
Political commentators say the midterms represent a serious setback for Musk in Texas and a broader blow to his national image. Voters across the country appeared to reject the idea that billionaires can purchase political influence.
“He is certainly the most visible of all these billionaire-trillionaires, and it put him on the ballot in a way that was difficult for a lot of people to swallow,” Brandon Rottinghaus, a political science professor at the University of Houston, said of Musk’s role in the Texas races.
“And it hurt Republicans because his presence really did magnify these concerns.”
JC Lintzenich, a visiting senior fellow at the German Marshall Fund, told CNBC’s Squawk Box Europe that voters were turned off by billionaires spending enormous sums to engineer election results. The outcome, he said, was “clearly a rejection of the Elon Musk aspect that has found its way into the Trump orbit.”
Jake Dollarhide, chief executive of Longbow Asset Management, predicted that a “Democratic sweep of Congress would put pressure on tech” and could bring new regulation of AI, potentially slowing the sector’s rapid growth.
Musk, like Trump, is accustomed to winning. But his challenges in Texas may soon extend far beyond wounded pride.
His AI strategy relied on backing from Trump’s pro-technology administration and the business-friendly policies of the defeated Abbott government.
Musk’s AI operation is currently concentrated around two enormous data centers, Colossus and Colossus II, near Memphis. He wants to expand substantially into Texas.
JC Lintzenich said voters were repelled by billionaires spending vast sums to force the political outcome they wanted
“Live by the sword, die by the sword,” Musk wrote on X in response to possible congressional investigations
That expansion faces an increasingly difficult political climate. Congress is now controlled by a party that shares public concerns about the unchecked construction of massive data centers, which are essential to AI but consume enormous amounts of power and water.
Hinojosa has called for a moratorium on new data centers and an end to the industry’s tax breaks. Like officials in other states confronting a surge of development, she wants operators to cover their full electricity costs rather than draw heavily on an already strained grid. She has also demanded protections for surrounding communities.
For Musk, those policies could be damaging. Ahead of its June IPO, SpaceX told investors that AI could become a $28.5 trillion industry. That forecast, however, depends on the construction of enough data centers to support it.
Musk has been rapidly developing data-center capacity on undeveloped land within the Starbase complex at Boca Chica. Hinojosa could challenge those plans after opposing the proposed sale of a 1,300-acre beachfront state park to SpaceX, following reports that Abbott’s administration had discussed the transaction.
“Let me be clear: Texas is not for sale,” Hinojosa said last month. Analysts expect her influence over tax incentives and permits to become a significant obstacle for Musk.
The tensions extend well beyond data centers in Texas.
Just before the midterms, a group of Silicon Valley House Democrats wrote to White House Chief of Staff Susie Wiles requesting an investigation into recent interruptions affecting Musk’s military-linked internet service in Ukraine.
Unexplained restrictions on Starshield, the military version of Starlink, disrupted Ukrainian drone operations in October. Defense officials said the limitations appeared overnight without advance notice.
Musk has said that Starshield, unlike Starlink, is controlled by the US government. The White House has presented a different account, saying Trump reportedly asked Musk to remove the restrictions.
Democrats have repeatedly warned about Musk’s influence in American politics. They are also concerned about the power wielded by a private citizen whose technology plays a role in wartime communications.
The letter to Wiles made clear that Democrats intended to investigate Musk themselves if they regained control of Congress. A Democratic Congress could also delay Musk’s proposed multitrillion-dollar Tesla-SpaceX merger for an extended period.
“Live by the sword, die by the sword,” Musk wrote on X last month in response to the prospect of congressional scrutiny. “Those who pick fights with me should understand that I will find out who is really pulling the strings and come for them, not just their puppets.”
It was characteristically combative. Yet many people, including insiders at Musk’s own companies, believe he has too much invested in Texas to risk a complete rupture with its Democratic leaders.
They do not expect him to leave Texas anytime soon.
If state officials make business conditions difficult enough, however, Musk may eventually be forced to reconsider. The question would then be where he could go. While Americans appear increasingly hostile toward the ultra-wealthy, billionaires did receive one piece of good news this week.
A proposal that would have introduced the world’s first billionaire tax was on track for defeat. The state that rejected the measure? California.
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