Four Finalist States, Others, Fight For Tesla’s ‘Gigafactory’

Thu, 02/27/2014 - 12:05pm
Joel Hans, Managing Editor,

Tesla Motors recently announced that four states are in contention for a massive new $5 billion plant that the company hopes will build batteries for 500,000 cars a year and employ up to 6,500 people. Those states are Nevada, Arizona, Texas and New Mexico, all of which are nearby, on a regional scale, to the company’s existing facility in Fremont, Calif. The company is reportedly already interested in a site near Reno-Stead Airport and the Tahoe Reno Industrial Center — the closest to the Fremont plant — but is apparently open to pitches from the other states.

The plant, which Tesla has coined a “gigafactory,” aims not only to produce enough batteries to fuel all its future electric vehicles, including the entry-level model that the company has been promising for years, but also enough to push down the cost of batteries altogether. On its blog, the company said: “The gigafactory is designed to reduce cell costs much faster than the status quo and, by 2020, produce more lithium-ion batteries annually than were produced worldwide in 2013.”

Tesla is claiming that by the first year of production, the plant will have reduced the per-kilowatt cost of its battery packs by 30 percent — a clear victory in the effort to create a cheaper electric vehicle for a majority of Americans.

The 10 million-square-foot gigafactory will be powered by solar and wind power, which would retain or create even more jobs in the associated industries. Clearly, the benefits for any state to land this projects are immense. There’s a lot on the line.

Nevada, Arizona, Texas and New Mexico are all in the running, but there’s no doubt that other states will try to entice Elon Musk with glamorous incentive packages to manufacture in their state instead. Tesla could be asking for a lot, but it seems that its primary concerns are logistical — being near to airports or other infrastructure that would be able to efficiently move product back to Fremont. Given the fact that the company wants to implement a great deal of solar-based power generation, expect to see incentives in favor of renewable energy production — and don't be surprised if SolarCity, the solar provider that Elon Musk is the Chairman of, gets a piece of that pie.

The situation is reminiscent of the Boing 777X competition, in which states groveled before the aerospace company for a chance to get the aircraft production, plus its 8,000+ jobs. North Carolina said it “would do anything” for the plant, while Missouri offered $1.7B in incentives, and Illinois lamented being merely a “finalist.”

In the end, Boeing went with what it new best — the machinists in Everett, Wash., just after they signed a new labor contract that both the company and the union agreed upon.

But one thing that is clear in Tesla’s situation, and is different from Boeing’s: Tesla isn’t interested in manufacturing much more, if at all, in California. The company predicts that site selection will be finished in the first few months of 2014, so the four mentioned states, plus any other, must work quickly to put in their bids. It will be interesting to see what kinds of incentives are offered, considering how many felt slighted by Boeing making a lot of insinuations it didn’t live up to.


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