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Tuesday, July 01, 2008

Tesla Motors Plans To Stay in California

By Andrew Webb
Journal Staff Writer
      The “Governator” has prevailed at New Mexico's expense.
    Tesla Motors, which planned to build an electric car factory in Albuquerque, will instead build it in California, where the company has been offered millions in incentives by a state eager to invest in energy alternatives.
    Calif. Gov. Arnold Schwarzenegger joined company officials at Tesla's Silicon Valley headquarters to announce the agreement Monday.
    Schwarzenegger had been seething since the company announced plans last year to manufacture a $60,000, all-electric sedan in the Duke City, according to published reports.
    “If California was a baseball team, this would be like winning the first-round draft pick and recruiting a player who is a perfect fit on our roster because Tesla Motors and its all-electric cars belong in California,” he said in a news release Monday.
    The San Francisco Chronicle reported that California's offer includes the state's purchase of $100 million in manufacturing equipment, which it will then lease to Tesla. The company will have the option to buy the equipment at the end of the lease term tax-free, for an estimated savings of $9 million. California will also make job training grants to Tesla of up to $1.5 million.
    Tesla's founders and key investors, including PayPal founder Elon Musk, joined Gov. Bill Richardson in February 2007 to announce plans for a $35 million plant here, which they said would employ up to 400 and begin production in fall 2009.
    New Mexico had offered a smaller package of incentives, including about $7 million in capital outlay for infrastructure at a planned West Side plant, tax breaks and job training funds.
    That announcement drew national attention, but the company's attention was soon diverted to last-minute fixes to its flagship $100,000 roadster, the first of which was finally delivered earlier this year.
    In December, as it faced ongoing delays, the company unceremoniously ousted co-founder Martin Eberhard, who had made several visits to New Mexico on Tesla's behalf.
    “This decision by Tesla is not surprising, given the recent instability of its management,” New Mexico Economic Development Secretary Fred Mondragón, said in a statement.
    “Still, it's unfortunate that Tesla backed away from its commitment to the state.”
    Toni Balzano, a spokeswoman for the New Mexico Economic Development Department, said Tesla informed Richardson's office of its decision before Monday's announcement.
    In a Monday afternoon blog post at Tesla's corporate Web site, President and CEO Ze'ev Drori said recent reviews of company plans indicated it would be advantageous to build manufacturing facilities near its San Carlos, Calif., headquarters.
    Tesla's battery packs are built in California. Though the Roadsters are built in the U.K. under contract with Lotus, they are also shipped to California for final assembly.
    Drori also cited Schwarzenegger's “commitment to leading the nation and world in addressing climate and energy concerns.”
    Schwarzenegger, during Monday's news conference, said it drove him “absolutely insane” that Tesla planned to build the 4-door sedan in New Mexico.
    “Naturally, such decisions as this leave some parties, in our case our friends in New Mexico, disappointed,” Drori acknowledged.
    “We would like to extend our sincerest gratitude to Gov. Richardson, his staff and all the professionals in the economic development community in Albuquerque for all of their assistance and advice, which they provided us with over the last year.”
   

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