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Published on March 12th, 2014 | by Important Media Cross-Post

16

Tesla’s Gigafactory Won’t Be In California, Texas Unlikely

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March 12th, 2014 by
 

Originally published on Gas 2.
By Robyn Purchia.

tesla-test-drive-2

Now that Tesla has announced development of a $5 billion “Gigafactory,” everyone is wondering where it will be built. Well, we just got handed a clue: it’s not California.

Although Tesla has a factory in Fremont, California, headquarters in Palo Alto, and a design studio in Southern California, the Los Angeles Times reported that Tesla eliminated California as a potential location for its Gigafactory on Friday. A spokesman in Gov. Jerry Brown’s administration told the Times that the state presented a proposal to the automaker with several possible sites, but Tesla didn’t bite.

“The Tesla battery Gigafactory begins to rival Henry Ford’s River Rouge factory in size and scope of ambition,” said Michael Bernick, former head of California’s Employment Development Department. “Land costs alone would make the Bay Area and most sites in California not competitive. Added are higher labor costs and regulatory costs in California. The state government has made significant efforts to have Tesla in California, but the economic forces all push elsewhere.”

It’s likely that cost and politics are the two reasons why Tesla is looking elsewhere. The prices for land and labor are higher in California than other states, and Tesla may consider it beneficial to be less dependent on California and its regulations and economic outlook (despite sometimes preferential treatment).

So with California out of the picture, which will be the lucky state?

Gov. Rick Perry (apparently an undercover environmental steward) is personally negotiating with EV manufacturer. But Texas will have to change its laws to get the deal. Currently, Tesla is unable to sell its vehicles directly to the public because it has no franchise dealer relationships in the state. Although this negatively affects Tesla sales and servicing, it seems unlikely that Texas will change the law to land the Gigafactory.

“We would not change the law, because the franchise laws of this state protect consumers statewide,” Bill Wolters, the head of the Texas Auto Dealers Association, told CNBC. “We have more dealers in Texas over 75 years old than we have manufacturers over 75 years old. Dealers are eternal in our state.”

If Texas is unwilling to change its franchise laws, Arizona, New Mexico, and Nevada would be happy to get the deal.

gigafactory

According to AZCentral, Scott Smith, the mayor of Mesa, invited the automaker to visit the greater Phoenix region to see firsthand the “outstanding business environment” Arizona offers. The city of Tucson has also made a formal proposal to house the Gigafactory.

“We are the home to the Mars exploratory mission at the University of Arizona and known nationally as the Solar City,” said Mayor Jonathan Rothschild. “I think Tesla will feel right at home in Tucson.”

Tim Chowdry, managing director of Global Equities, said that New Mexico’s culture, economy, demographics, and politics would make the state an “ideal” location. A Tesla-New Mexico deal for the Gigafactory may also make amends for the automaker’s snub seven years ago.

But as Gas 2 previously reported, Nevada seems like the likely location for the Gigafactory. According to the Reno Memo, an official said Tesla representatives visited Reno “a few months ago” to explore sites at the Stead airport and at the Tahoe-Reno Industrial Center. It also helps that Nevada has already passed a law allowing the testing of autonomous vehicles on public roads — a technology Tesla is pursuing.

With California out, and Texas unlikely to change its franchise laws, I’m putting my money on a table in the Silver State.

Source: The L.A. Times | Image: Christopher DeMorro/Important Media

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  • ttrr

    It will be in California, most likely near the Salton Sea, where there is a large source of lithium. Tesla, state officials and Imperial County officials are already in discussions.

    • Marcos Moreno

      Simbol Materials will be ready to meet the demand. The Salton Sea region with geothermal plants and more to come, will supply the raw materials needed which will be extracted from the brine.

  • Craig

    All those gun-totin’ Texans who tried to start a movement to secede from the U S after Obama was elected are probably the same deadheads who are “protecting consumers” by not allowing Tesla to sell in their state. It would seem that the narrow-minded Texan mentality may best be suited for rodeos instead of progress.

  • Jeffrey2099

    I fail to see how franchise laws protect the consumer. By adding a middle man the consumer pays more for the same car. Direct purchase from the manufacturer is the obvious way to go. Texas would be foolish to lose a shot at getting this plant to protect dealerships that should be able to stand on their own.

  • James Holden

    Tucson has close proximity to Guaymas , MX which would make for a great place to receive Lithium shipments from the largest 2 producers of Lithium in the world, Chile and Argentina. Sure, the Reno area has Li production, but it is nowhere near the capacity that Tesla would need for this factory. They will have to bring Li into a port somewhere and ship it to this factory. The Union Pacific line that runs through Tucson to LA, Long Beach, and on to Fremont does not have to run through any mountain passes that are subject to heavy snowfall. So from a logistics perspective a Tucson location would seem to make the most sense.

    There is ample land along the train route to situate a factory of the foot print that Tesla wants. Solar energy is already huge here and another solar powered factory would fit right in.

    AZ does have some political issues that I could see causing problems, however the Tucson area and Southern AZ in general would offer a very comfortable fit for a company used to the bay area.

    Bottom line is I don’t see the most common reason offered up for a Reno location as meaning much in the end. There simply is not enough Lithium there for it to mater.

  • http://www.gregor.us/ gregor.us

    Reno has a steppe climate, in addition to the 3600 hours of annual sunshine. That means the gigafactory can reasonably expect a steadier distribution of power from any wind investment it makes, along with solar. Reno has very good wind supply. Additionally, Reno has intermodal infrastructure, and of course the primary rail route to SF Bay runs through Reno. Huge supply of sunshine and wind, and great transport infra. I’m betting on not just Nevada, but Reno NV.

  • http://electrobatics.wordpress.com/ arne-nl

    “We would not change the law, because the franchise laws of this state protect consumers statewide,” Bill Wolters, the head of the Texas Auto Dealers Association, told CNBC. “We have more dealers in Texas over 75 years old than we have manufacturers over 75 years old. Dealers are eternal in our state.”

    This is horrible! It really says all about the whole auto dealers vs Tesla kerfuffle.

    This guy is the talking head of a special interest group but he says: “We would not change the law” We! That is exactly what seems to be happening. They write their own laws (and pay off governors to not interfere).

    • Alan Dean Foster

      ” Dealers are eternal in our state:”

      That’s what the buggy-whip and stagecoach builders said.

      • http://zacharyshahan.com/ Zachary Shahan

        Haha, indeed :D

  • Banned by Bob

    Still think that Nevada is the front runner

  • Ross

    Having the factory in a state that bans open selling might help to highlight the ridiculousness of it.

  • http://cuberules.com Scot Herrick

    Doesn’t Arizona have the same ban on allowing Tesla selling cars in the state? I thought it was TX, now NJ and AZ.

    • Jake Kleinberg

      Think North Carolina has a ban too.

    • http://electrobatics.wordpress.com/ arne-nl

      As far as my information goes, that is true. Maybe Arizona has shown willingness to renegiotiate the dealer law.

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