Now that Tesla Motors Inc. has identified the four finalists for its $5 billion “gigafactory,” a California-based equity analyst is more convinced than ever that New Mexico will be its ultimate destination – provided it can put together a competitive incentives package.
Trip Chowdhry, an analyst with Global Equities Research of Redwood Shores, Calif., said he believes New Mexico is the best fit for the 10 million-square-foot battery factory that Tesla says it intends to build in Arizona, Nevada, New Mexico or Texas.
The factory would employ roughly 6,500 workers, sit on between 500 and 1,000 acres, and produce enough batteries by 2020 to power 500,000 vehicles a year, the company said last week.
“No, I wasn’t surprised. I was thinking by default that New Mexico would be in it. It may come down to who will provide them with the best incentive,” he told the Journal.
“If all the states provide equal incentives, I am almost 100 percent sure the new ‘gigafactory’ will be built in New Mexico.”
Among the incentives New Mexico has at its disposal are this year’s implementation of a “single sales factor” tax formula, investment tax credits for manufacturers, high-wage jobs tax credits, industrial revenue bonds and the Job Training Incentive Program, which funds classroom and on-the-job training for newly created jobs. Tesla also might be eligible for some energy-related tax credits. (See story on Page B1 about New Mexico’s tax and tax credit advantages.)
Noting that Bill Gates chose Albuquerque to start Microsoft back in the 1970s before moving to Bellevue, Wash., Chowdhry said New Mexico has something to offer Tesla that the other states can’t match – a “clean slate.” Nevada always will be known for its casinos, he said, and Texas for its oil wells. But New Mexico would be forever defined by Tesla’s battery production factory, which many analysts believe could be a game-changer not only for battery-powered cars, but for the energy industry as a whole.
“From a global perspective of brand awareness and positive association, New Mexico would be an ideal space for Tesla Motors to build their ‘gigafactory,’ ” he said.
Chowdhry dismissed reports that Tesla is using the selection process as a ruse to wring out lucrative concessions from its home state of California. The company is based in Palo Alto and builds its cars in nearby Fremont.
Tesla CEO Elon Musk already has given a big gift to that state, Chowdhry said, proving that manufacturing can be done profitably in the United States.
Moreover, Musk and Tesla believe in the “bigger good for the whole world,” he said, and now have an opportunity to create an entirely new ecosystem somewhere else.
“There is no benefit to Tesla to build the factory in California,” he said.
The company’s announced timetable for the factory, which Albuquerque business leaders said last week would be built in the Albuquerque metro, calls for construction to begin later this year and production to ramp up in 2017.
Tesla has said the plant is necessary to lower the production costs of the lithium batteries it will use to power its third-generation vehicle, a sedan due out in 2017 with a targeted starting price of $35,000.