Published on May 16th, 2020 | by Steve Hanley0
Tulsa Or Austin? Both Are Reportedly Finalists For Next Tesla Factory
May 16th, 2020 by Steve Hanley
It’s no secret Tesla wants to build a second US automobile manufacturing plant. There is simply no more room at the Fremont facility to make the Cybertruck or Tesla Semi, and a second production line for the Model Y will be needed if demand for it is as high as Elon Musk thinks it will be. Musk has said the new factory will be somewhere in the middle of the country.
According to CNBC, the decision has come down to either Austin (Texas) or Tulsa (Oklahoma). It reports that Tesla representatives visited two potential sites in the Tulsa area last week and also visited sites around Austin. Some reports say the decision has already been made and Austin is the winner, but there is no confirmation of that.
CNBC claims other locations within the US are still being evaluated. Tech Crunch reports that Nashville was in the running — Volkswagen has a factory there and there are battery factories nearby as well — but has since been eliminated from consideration.
One remaining question is, what are states and cities offering Tesla in terms of financial and regulatory incentives. Any new factory will obviously add lots of new jobs to the area. The Fremont factory now employs about 10,000 people and the Gigafactory in Nevada employs another 6,500. Governments are usually willing to offer incentives such as tax breaks to lure new business to the area, despite the fact those new jobs bring a need for more schools, police, fire, and other services that will need to be paid for through higher taxes on everyone else.
On the most recent Tesla earnings call in April, Musk said he wanted a decision made about the next factory’s location within 3 months, which means before the end of July. Nobody is confirming anything on the record at the moment. Austin has a strong manufacturing base, but is quite a bit further away from other US markets than Tulsa. Also, it seems that it makes little sense to build vehicles in a state that prevents you from selling your vehicles directly to customers at your own stores. Perhaps that is part of the conversation going on between Tesla, Austin policymakers, and the government of the state of Texas.
Tesla is skilled at taking the lessons learned from building previous factories and leveraging them to make its next factory the best it can be. By the time construction starts on the second US factory, all the knowledge gained from Fremont, Shanghai, and Berlin will be baked into its design.
During the April earnings call, Tesla’s chief financial officer, Zachary Kirkhorn, offered some hints about what the next factory might look like. “There’s significant efficiencies by having as much as possible and similar product lines under the same roof and as much vertical integration as possible all in one facility.” Based on that prescription, expect the new factory to be giganormous. Some say it might be a “terafactory,” a term first coined by CleanTechnica’s own Chanan Bos and used more recently by Elon Musk.