September 3, 2014

Tesla reportedly to select Nevada for huge battery plant

Nevada Gov. Brian Sandoval’s office has scheduled a “major economic development announcement” for Thursday afternoon.

Tesla Motors has chosen Nevada as the site for a massive $5 billion factory that will pump out batteries for a new generation of less expensive electric cars, a person familiar with the company’s plans said Wednesday.

The person, who spoke on the condition of anonymity because no official announcement was made, said work will resume soon at an industrial park outside Reno. Nevada still must approve a package of incentives negotiated by Tesla.

Four other states — California, Texas, Arizona and New Mexico — were vying for the project and the estimated 6,500 jobs it will bring.

Tesla needs what it calls the “gigafactory” to make cheaper batteries for its Model 3, a mass-market electric car the company hopes to sell by 2017 for around $35,000. Tesla now offers only the Model S sedan, which starts at $70,000.

Nevada Gov. Brian Sandoval’s office said only that he will make a “major economic development announcement” Thursday afternoon. A spokesman for Tesla, based in Palo Alto, Calif., said company representatives would be at the Capitol in Carson City for the announcement but offered no other details.

Tesla has done site preparation at the Reno Tahoe Industrial Center but had not publicly committed to building in Nevada, instead waiting as other states put together their best incentive packages.

This spring, Tesla CEO Elon Musk announced that the company would take the extremely unusual step of spending millions to prepare sites in two states — or perhaps even three — before choosing a winner.

The person familiar with Tesla’s plans told The Associated Press that a second site will still be prepared in case Nevada cannot deliver the promised incentives or a second factory is desired.

Sandoval has declined to discuss any incentives he has offered during negotiations with Tesla. Based on Musk’s public statements of what he expects a winning bid would be worth, the incentive package will likely total at least $500 million. Sandoval would have to call a special session of the Legislature to approve tax breaks, grants or other incentives of that magnitude.

Nevada’s other advantages include low tax rates, plenty of sun and wind to generate “green” power, and relative proximity to Tesla’s manufacturing plant near San Francisco. The industrial park 15 miles east of Reno is also near a deposit of lithium, an essential element to produce the battery cells.

Tesla will pay about half the factory’s cost. The other major investor is Panasonic, which will make the lithium-ion battery cells and invest in equipment.

Lance Gilman, principal and director of the Reno Tahoe Industrial Center, said he had not been told of a final decision.

“It would be the most exciting news of the century to me,” he said.

At 167 square miles of high desert, the industrial park is the nation’s largest — befitting such a large factory. Tesla has said it will need about 10 million square feet.

Competition has been intense among the states, which have bid up their incentive packages in private negotiations with Tesla.

Texas Gov. Rick Perry has made several trips to California and lobbied Texas lawmakers to address state laws that prohibit Tesla’s direct sales model from bypassing car dealerships.

Some politicians in California, where Musk founded not just Tesla but also PayPal and the commercial space exploration firm SpaceX, made winning the gigafactory a point of pride.

“Tesla is a California-born company that the state has invested heavily in, and we want it to succeed,” Sen. Ted Gaines, R-Roseville, said in a statement.

He called Tesla’s decision a “clear indictment of our business climate.”

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