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Why Not A Tesla ‘Gigafactory’ In California?

The state made a few proposals for several possible sites, but the automaker wasn’t interested — there are a few compelling reasons not to invest too heavily in the state of California.

When Tesla Motors announced it had four states in the running for its so-called “gigafactory” for building battery packs, there was one notable state missing: California. That’s where the company has its current facility and headquarters, and even though there’s no visible plans to change that situation, it was an announcement that confused many.

Now we have a little more information as to the current relationship between the company and the state in which it resides, and why Tesla is looking elsewhere.

The Los Angeles Times got a statement from the state’s Office of Business and Economic Development: “The Governor's Office of Business and Economic Development maintains a strong partnership with Tesla and continues to work with them on future opportunities in California.” Basically, the state made a few proposals for several possible sites, but the automaker wasn’t interested.

The likely main reason Tesla is looking elsewhere to build its sprawling battery plant and the associated solar panels and wind turbines to help power it: cost. California’s real estate is simply too expensive to buy up such a large portion of land. And because taxes are higher, as is the general cost of living, wages also need to be higher to be competitive. Compare that to any of the four states in contention, and it’s pretty clear that each would offer cheaper labor forces.

Politics may also be a consideration — California is known for policing companies more heavily than just about any other state, and sometimes more than the federal government. The company could be hedging its bets in case the regulatory picture changes, or the economic situation in California grows dire.

Either way, the competition will serve Tesla well. Tucson has already thrown in its bid for the plant, and there’s likely others that have done so as well, albeit in less public fashions. States outside the four could also offer bids, but due to logistics, it’s unlikely the company will stray much further from the Southwest.

Source: Los Angeles Times