The Davis City Council in California is preparing to consider a resolution that could significantly alter the city’s relationship with companies owned or controlled by Elon Musk, including Tesla, SpaceX, Starlink, and xAI.
If approved, the proposal would prohibit the city from entering into new contracts with Musk-affiliated firms and encourage divestment from their publicly traded securities.
The item is scheduled for discussion at a council meeting later tonight (Tuesday, February 17 2026) following requests from residents who urged city officials to reconsider business and investment ties with Musk-controlled companies.
Resolution Outlines Wide-Ranging Restrictions
According to a report from Davis Vanguard, the draft measure is titled “Resolution Ending Engagement With Elon Musk-Controlled Companies and To Encourage CalPERS To Divest Stock In These Companies,” and lays out several proposed restrictions. If adopted, the city would be prohibited from signing new contracts or purchasing goods and services from Musk-related businesses, including “Tesla, SpaceX, Neuralink, Starlink, xAI, The Boring Company, and Tesla RoboTaxis.”
The resolution states that the city: “Shall not enter into any new contracts, subsidies, or purchasing agreements with companies owned or controlled by Elon Musk.” It also calls for terminating any existing agreements “where feasible and legally permissible.”
In addition to procurement limits, the proposal would restrict the city’s use of Musk-affiliated digital platforms. Specifically, the draft resolution says the city: “Shall prohibit paying for the use of Musk-controlled platforms and services (such as X and xAI) in official City communications, operations, and IT infrastructure.”
The city would also be required to conduct additional review of any future projects involving Musk-connected companies and avoid working with lobbyists representing those businesses.
Divestment Pressure Extends Beyond City Operations
Beyond its own purchasing and contracting policies, the resolution seeks to influence broader investment decisions. It proposes that Davis encourage the California Public Employees’ Retirement System (CalPERS) to remove Tesla stock and related securities from its portfolio.
The resolution’s preamble asserts that the city is committed to transparency and governance standards, stating, “WHEREAS, the City of Davis is committed to promoting transparency, accountability, public safety, and democratic governance.”
It also alleges that Musk-controlled companies have faced regulatory scrutiny, lawsuits, and other investigations, and concludes that the “use of products of Musk-controlled companies does not align with the values of the City of Davis.”
No immediate financial impact, but future flexibility could be affected
According to the staff report, the proposed measure would not have an immediate impact on city finances. Officials noted, “There is no immediate fiscal impact, as the City does not currently have investments in Musk-controlled companies.”
However, the report cautioned that the resolution could limit the city’s options in the future, particularly when evaluating contracts, services, or investment opportunities involving Musk-affiliated firms.
City council members have several options, including approving the resolution as written, modifying it, referring it for further review, or rejecting it altogether.
We will keep an eye on what happens at tonight’s council meeting and update you on whether this resolution passes as proposed, or gets rejected by council.
