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Nevada Strikes Tesla Gold

tesla
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It appears Nevada has the winning hand in the high-stakes game of Tesla poker.

The Palo Alto, Calif.-based electric carmaker, which was seeking an incentives package in the $500 million range from competing states, is expected to announce today that it intends to build its massive $5 billion battery factory in Nevada, putting an end to New Mexico’s dreams of hosting the “gigafactory” – and the 6,500 jobs that come with it.

On Wednesday, Tesla confirmed reports that company officials will join Nevada Gov. Brian Sandoval and other state leaders for a news conference this afternoon to announce a “major economic development.”

“Tesla looks forward to joining Governor Sandoval and legislative leaders tomorrow in Carson City for a major economic development announcement,” Tesla Motors Inc. spokeswoman Liz Jarvis-Shean wrote in an email response to a Journal inquiry.

The choice of an industrial site outside of Reno hardly comes as a surprise, given Tesla acknowledged in late July that it had broken ground in the Tahoe Reno Industrial Center, a 107,000-acre park located nine miles east of Reno.

At the time, however, Tesla CEO Elon Musk said the company still planned to break ground in at least one of the other finalist states – Arizona, California, New Mexico and Texas – to ensure there was a backup plan should any unforeseen delays put its construction timetable at risk.

It was unknown Wednesday whether Tesla still intends to follow through with those plans or simply will proceed to build the factory in Nevada.

A spokesman for Gov. Susana Martinez said the Governor’s Office had not received official word of Tesla’s plans as of Wednesday afternoon.

“We can’t comment because we have not been informed by the company about where they intend to locate,” Martinez spokesman Enrique Knell said.

House Majority Whip Antonio “Moe” Maestas, D-Albuquerque, said he believes geography played a major role in Tesla’s decision-making process, while downplaying the possible role of tax incentives and New Mexico’s labor laws.

“I think New Mexicans should be proud that a company of that stature considered setting up shop here, but at the end of the day, it’s whether they choose you or not,” Maestas told the Journal . “Everyone was working hard to get it done.”

Mayor Richard Berry’s office issued a short statement through a spokesman Wednesday afternoon, saying the state put together a “world-class proposal.”

“The fact that New Mexico has been in the running for the Tesla Gigafactory has given us great exposure and has contributed to an increased number of inquiries from other businesses,” chief of staff Gilbert Montano said in a statement. “We will continue advocating for Albuquerque and we look forward to further opportunities to recruit companies and jobs to our city.”

If Tesla’s decision to bypass New Mexico for another state sounds somewhat familiar, it should.

In February 2007, then-Gov. Bill Richardson announced that Tesla planned to break ground on a $35 million automobile assembly plant in Albuquerque to build at least 10,000 of its five-passenger Model S cars. The facility was expected to employ 400 workers.

Sixteen months later, however, Tesla announced it would stay in California, after then-Gov. Arnold Schwarzenegger was able to deliver a major tax break and other incentives to the company.

In acknowledging two months ago that his company had broken ground in Nevada, Musk said Tesla still needed assurances from state officials that everything was in place – including incentives.

“At this point, the ball is in the court of the governor and the state Legislature,” he said at that time.

Musk also said he expected the winning state to contribute up to 10 percent of the anticipated cost of the $5 billion factory, or roughly $500 million. The remaining funds would come from Tesla and its partners.

On Wednesday, it remained unclear whether all those details had been worked out.

Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, told the Las Vegas Review-Journal that state lawmakers had yet to decide whether a special session would become necessary to approve an incentives package.

“I would say, no, we have not crossed that bridge yet,” she told the newspaper.

Tesla has said getting its new factory built on schedule is critical to the company’s plans to begin selling a new sedan in 2017 for $35,000, roughly half as much as today’s Tesla S model.

Tesla has said the 10 million-square-foot plant would produce enough batteries by 2020 to power 500,000 vehicles a year, which would make it the world’s largest manufacturer of lithium-ion batteries.

Previously, Albuquerque officials had said the plant would have been built somewhere in the metro if New Mexico had been chosen.

Journal staff writer Dan Boyd contributed to this report.


New Mexico vs. Nevada

Here is a look at how New Mexico and Nevada stacked up in the competition for Tesla Motors’s ‘gigafactory’ based on an Associated Press analysis of tax incentives and other advantages:

New Mexico

Various tax credits or breaks: For investments by manufacturers and the creation of high-wage jobs and renewable energy.

Worker-training subsidies: The state pays up to 75 percent of new worker salaries for up to six months.

“Closing fund”: Local governments can tap public money to finance infrastructure improvements, such as roads and utilities, around a factory. The Legislature provided $15 million for the current fiscal year.

Other advantages: State officials also tout a diminishing corporate income tax rate, low property taxes, rail connections to California and competitive electricity rates.

Nevada

Few taxes: No personal income tax, franchise tax, estate tax, inheritance or gift tax, and no taxes on corporate shares. No corporate income tax, although voters will decide in November whether to implement one to finance education.

Other tax credits or breaks: Up to a 50 percent abatement on personal property taxes for up to 10 years; a partial abatement on sales and use taxes on capital equipment purchases; and a deferral of sales and use taxes on capital equipment.

Worker training subsidies: Up to $1,000 per employee for job training if the company provides a 25 percent match, makes a five-year business commitment and pays at least hourly minimum wages.

Other advantages: Proximity to the assembly plant in Fremont, Calif., where Tesla makes its cars; significant deposit of lithium, which is essential to making the batteries.

Source: The Associated Press

 

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