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Tesla: New Mexico one of four finalists for ‘gigafactory’

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teslaCopyright © 2014 Albuquerque Journal

New Mexico is one of four finalists for Tesla Motors Inc.’s multibillion-dollar battery “gigafactory,” a 10-million-square-foot facility that is expected to employ up to 6,500 workers.

The Palo Alto, Calif.-based electric car manufacturer said Wednesday that it has narrowed the location to Arizona, Nevada, New Mexico and Texas for the giant plant that would power its cars of the future.

And should Tesla ultimately choose New Mexico for its state-of-the-art facility, that certainly would be good news for the Albuquerque metro.

“Tesla is one of the most exciting companies on the planet, and we are thrilled that the Albuquerque metro area is being considered for this world-class project,” Gary Tonjes, president of Albuquerque Economic Development, told the Journal.

Tonjes said his organization first reached out to Tesla last summer after seeing reports in the media of the company’s success and the growing popularity of its battery-powered Model S luxury sedan, which earlier this week was named Consumer Reports’ top pick for 2014.

“We contacted them last August … and let them know about changes taking place in New Mexico since we were last engaged in conversations with them,” he said.

Tonjes was referring to 2007, when Tesla came close to building a $35 million automobile assembly plant in Albuquerque. But a series of tax breaks and other incentives offered by then-California Gov. Arnold Schwarzenegger persuaded the company to build its cars in its home state.

New Mexico is far more competitive now, Tonjes said, citing a tax-reform package approved by the Legislature last year that included the “single sales factor” tax formula. As a result, a corporation’s local payroll and property no longer are considered when assessing how much it owes the state in corporate income taxes.

Those sentiments were echoed by Jon Barela, secretary of the state’s Economic Development Department.

“This is great news for New Mexico. It demonstrates New Mexico is now competitive in its efforts to land a great company like Tesla,” he told the Journal. “Through Gov. (Susana) Martinez’s leadership and those bipartisan efforts of pro-business legislators, New Mexico is able to compete with states like Texas for these types of jobs.”

Still, Barela cautioned that New Mexico faces “fierce competition” to land Tesla’s battery plant, “but it’s good to know that we’re now in the game.”

For his part, city Economic Development Director Gary Oppedahl said Wednesday that he was “thrilled” with the news that Tesla is considering the Albuquerque metro for its lithium-ion battery factory.

“We’ve been working for some time now in a coordinated effort to make the best case for Tesla Motors to come to the Albuquerque Metro Area,” he said in statement. “We are thrilled to be in the running for a site of this magnitude which has the potential for thousands of jobs with a very forward-looking company. This type of advanced technology is the perfect complement for New Mexico’s strengths.”

Last week, Tesla CEO Elon Musk said he would host a conference call this week to release more details about the battery factory. Instead, the company posted the new information on its blog Wednesday.

Tesla said it would invest $2 billion — roughly half of the $4 billion to $5 billion it will take to build the massive factory — and rely on its unnamed partners to cover the rest. While it didn’t name those partners, one of them is widely expected to be Panasonic Corp., which supplies batteries for its cars today.

The company also said the new factory will require between 500 and 1,000 acres, and it would manufacture enough batteries to power 500,000 vehicles by 2020.

“As we at Tesla reach for our goal of producing a mass market electric car in approximately three years, we have an opportunity to leverage our projected demand for lithium ion batteries to reduce their cost faster than previously thought possible,” the company said in a news release.

“In cooperation with strategic battery manufacturing partners, we’re planning to build a large scale factory that will allow us to achieve economies of scale and minimize costs through innovative manufacturing, reduction of logistics waste, optimization of co-located processes and reduced overhead.”

Previously, Musk has said the plant is necessary to lower the production costs of the lithium batteries that it will use to power its third-generation vehicle, a sedan due out in 2017 with a starting price of $35,000.

Tesla’s selection of New Mexico as one of the four finalists comes less than two weeks after Global Equities Research analyst Trip Chowdhry told the Journal that he believed Tesla would build the battery plant in New Mexico.

Other analysts had suggested the company might choose Arizona, Nevada or Texas — if it didn’t ultimately decide to stay home in California to keep a lid on transportation costs.

Last week, the Reno Gazette-Journal reported that two unnamed sources had confirmed Tesla was scouting sites in northern Nevada.

One of those officials told the newspaper that Tesla representatives had visited Reno several months ago, checking possible sites near Reno-Stead Airport and the Tahoe Reno Industrial Center, a 107,000 acre industrial park nine miles east of Reno with access to Interstate 80 and a Union Pacific rail line.

Nevada is also home to the nation’s only active lithium-producing mine in Esmeralda County.

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