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Report: Tesla eyes New Mexico for factory

Copyright © 2014 Albuquerque Journal

Six years after it pulled the plug on plans for a multimillion-dollar automobile assembly plant in Albuquerque, Tesla Motors Inc. once again may be casting an eye toward the state – this time as the future home of a $2 billion “mega” battery factory to supply its electric cars.

That’s the opinion of Global Equities Research analyst Trip Chowdhry, who says New Mexico would be an “ideal” location for such a facility.

New Mexico may be in the running for a $2 billion Tesla battery plant. This 2012 photo shows a Tesla Model S outside the Tesla factory in Fremont, Calif. (AP Photo/Paul Sakuma, File)

New Mexico may be in the running for a $2 billion Tesla battery plant. This 2012 photo shows a Tesla Model S outside the Tesla factory in Fremont, Calif. (AP Photo/Paul Sakuma, File)

Chowdhry, managing director of equity research at Global Equities, told the Journal on Friday that he believes the Palo Alto, Calif.-based company will announce plans in the next “six to eight months” to build the facility at an unspecified location in New Mexico.

He also expects the company to partner with Panasonic and Sanyo in the project.

If a decision has been made on where to locate the factory, Tesla and state officials aren’t talking about it.

Contacted about Chowdhry’s report, Tesla emailed a response to the Journal saying: “Thanks for reaching out. We do not have a comment.”

The state Economic Development Department said Friday, “It is the department’s policy to not comment on speculation or rumors.”

Chowdhry’s comments reflected his company’s Feb. 5 research report, which said its “converged view” was based on information it had acquired from attending conferences and summits related to “Telematics, Self Driving Cars (and) modular designs.” It was not based on direct information from Tesla officials.

The factory would cost about $2 billion to build, Chowdhry said, and would employ between 1,500 and 2,000 workers. But another 8,000 indirect jobs would be created through the creation of related service companies, he said.

The analyst said the factory would be capable of generating 30 gigawatts of production capacity a year, which would make it the largest such facility in the world. It may also manufacture a hybrid battery pack that could increase the driving range on Model S cars by 10 percent to 15 percent.

Chowdhry cited the state’s culture, economy, demographics and politics as reasons why Tesla would build the plant in New Mexico.

“Based on everything we know … this is probably the ideal location to set up this factory,” he said.

New Mexico could be in the running for such a project because of two pieces of legislation – one approved last year and one moving through the Roundhouse now.

Last year, the “single sales factor” tax formula was approved as part of a bipartisan tax reform package. Under that change, a corporation’s local payroll and property no longer have to be included along with the value of its local sales when assessing how much it owes the state in corporate income taxes.

The previous tax policy essentially penalized companies that manufactured products in New Mexico and sold them out of state.

This year, identical bills in the Senate and House would allow public utilities to negotiate subsidized electric rates with large-scale industrial investors. The subsidized rates would apply only to prospective manufacturers that invest $5 million or more, create at least 20 jobs paying $40,000 or higher, and consume at least one megawatt of electricity.

Albuquerque Economic Development, a nonprofit entity that recruits companies to the state, has said both of those tools would help New Mexico compete with other states for major manufacturers and other projects.

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

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

This past fall, Tesla founder Elon Musk announced his plan for the world’s largest battery plant.

“I don’t think permitting is going to be the driver here,” Musk said in a conference call with reporters. “This is going to be a very green factory. There is going to be a lot of solar power. It’s going to have essentially zero emissions and there are no toxic elements that are going to come out of this factory and we will build in recycling capability right into the factory.

“It is going to be a really giant facility, like say we are doing that something that’s comparable to all lithium-ion production in the world in one factory,” he said.

Business Editor Michael G. Murphy contributed to this report.