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Tesla could name two states finalists for $5 billion gigafactory

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New Mexico just doubled its chances of making it to the next round of the Tesla sweepstakes.

Two months ago, Tesla Motors announced four states – Arizona, Nevada, New Mexico and Texas – were finalists for its new $5 billion battery factory that would employ up to 6,500 workers.

The Palo Alto, Calif.-based electric car company company, which wants to begin building by the end of this year, was expected to announce the plant’s site soon.

But it now intends to move forward in at least two states to make sure there are no last-minute glitches that would delay production of its lithium-ion batteries.

“What we’re going to do is move forward with more that one state, at least two, all the way to breaking ground, just in case there’s last-minute issues,” Tesla Motors Inc. CEO Elon Musk told Bloomberg earlier this week. “The No. 1 thing is we want to minimize the risk timing for the gigafactory to get up and running.”

The plant, which would be the world’s largest manufacturer of lithium-ion batteries, is critical to the company’s plans to lower battery costs enough to produce a sedan due out in 2017 with a target price of $35,000 — half the cost of its current Tesla S model.

The factory would require between 500 and 1,000 acres and would produce enough batteries by 2020 to power 500,000 vehicles a year.

State and city officials have said little publicly about negotiations to bring the Tesla gigafactory to New Mexico, other than to suggest it would be built somewhere in the Albuquerque metro.

“It is our continued position that the Albuquerque metropolitan area is ideally suited for the future home of Tesla,” Mayor Richard J. Berry told the Journal in a statement Wednesday. “We remain committed to a coordinated effort to make the best case to attract this forward-thinking company to New Mexico.”

John Boyd, who heads a New Jersey site location consulting firm not affiliated with the Tesla project, told the Journal he wasn’t surprised by Musk’s approach.

“This is in line with what we would expect,” said Boyd, principal of the Princeton-based The Boyd Co. Inc. “Tesla has the resources to carry out the site selection process in two sites simultaneously. This helps maintain project confidentiality and may provide Tesla greater leverage in marshaling of incentives.”

Boyd, who believes Tesla ultimately will choose Reno, Nev., or San Antonio as the home for its factory, said he expected the carmaker to identify the two sites soon.

“I think we’re going to know a lot more within the month, by mid-May,” said Boyd, whose firm has provided site-selection assistance to such companies as AT&T, Chevron, Dell, Honda Motor Co., PepsiCo and Verizon Wireless.

Tesla is scheduled to release its first-quarter earnings May 7.

Boyd also acknowledged that California is making one final push to convince Tesla to build the battery plant in its home state, but he doesn’t believe Tesla will do that. More likely, he said, the company will use these talks as leverage to drive a better bargain with the other states.

“I would be very surprised if they ended up in California,” he said. “However, I think their folks are doing due diligence and kicking the tires in an intense way.”

 

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