Create a free account to continue

Tesla Motors Nixes New Mexico Deal

State officials are expressing disappointment that the all-electric car company will keep its manufacturing plant in California instead of building its next car in New Mexico.

SANTA FE, N.M. (AP) -- New Mexico officials are expressing disappointment that the company that built the first mass-produced, all-electric car will keep its manufacturing plant in California instead of building its next car in New Mexico.

California Gov. Arnold Schwarzenegger and state Treasurer Bill Lockyer worked out a deal for a tax break for Tesla Motors Inc. after learning that the San Carlos, Calif.-based company would build its second-generation vehicle in New Mexico.

New Mexico Gov. Bill Richardson had announced in February 2007 that Albuquerque would be home to a $35 million automobile assembly facility for Tesla Motors' all-electric, four-door, five-passenger sedan. He said the facility would mean 400 new jobs.

But on Monday, New Mexico Economic Development Secretary Fred Mondragon announced that the deal had been trumped by California's offer.

"This decision by Tesla is not surprising given the recent instability of its management," Mondragon said. "Still, it is unfortunate that Tesla backed away from its commitment to the state."

Tesla had announced plans to produce at least 10,000 all-electric, five-passenger sedans a year in Albuquerque beginning in the fall of 2009.

California's financial break, announced Monday, allows Tesla to avoid paying state sales tax on equipment it buys to build its Model S. That will save the company 7 percent to 9 percent on each purchase.

The five-passenger sedan is expected to cost about $60,000 and will be able to travel 225 miles between charges to its electric engine.

Schwarzenegger said it drove him "absolutely insane" to learn Tesla planned to take its environmentally friendly technology to another state.

He was among several celebrities who lined up to buy Tesla's first-generation electric sports car, the Roadster, which has a base price of $109,000. Schwarzenegger is awaiting delivery.

The car goes from a dead stop to 60 mph in just under four seconds and tops out at 125 mph. The roadster takes 3½ hours to recharge when its batteries are depleted.

More in Operations