Tesla will continue to operate its electric vehicle factory in Fremont, California, and increase production there by 50 per cent.
"I'm excited to announce that we're moving our headquarters to Austin, Texas," Musk said at an annual shareholders meeting on Thursday, reports Washington Post.
"Just to be clear, though, we will be continuing to expand our activities in California."
Musk himself moved to Texas last year, as SpaceX increased its presence in the southern tip of the country.
Tesla started building its next US Gigafactory outside Austin in 2020 and a new video of the project shows the place is already turning into a busy industrial area.
A video uploaded on YouTube by electric car enthusiast Jeff Roberts showed the progress of the factory, recorded from day one.
Initially, Tesla referred to the factory as the Cybertruck Gigafactory because the automaker planned to produce the electric pickup truck there.
However, Tesla first planned to produce the Model Y at the factory, and the company later renamed it "Gigafactory Texas".
Tesla also plans to establish battery cell production at the factory and make it an "ecological paradise" open to the public.
In addition, a Tesla Gigafactory Texas battery-related job opening was recently posted by the electric car maker in its Careers page. The job listing was shared by Automotive President Jerome Guillen via his official LinkedIn account.