Although Tesla has a factory in Fremont, California, headquarters in Palo Alto, and a design studio in Southern California, the Los Angeles Times reported that Tesla eliminated California as a potential location for its Gigafactory on Friday. A spokesman in Gov. Jerry Brown’s administration told the Times that the state presented a proposal to the automaker with several possible sites, but Tesla didn’t bite.
“The Tesla battery Gigafactory begins to rival Henry Ford’s River Rouge factory in size and scope of ambition,” said Michael Bernick, former head of California’s Employment Development Department. “Land costs alone would make the Bay Area and most sites in California not competitive. Added are higher labor costs and regulatory costs in California. The state government has made significant efforts to have Tesla in California, but the economic forces all push elsewhere.”
It’s likely that cost and politics are the two reasons why Tesla is looking elsewhere. The prices for land and labor are higher in California than other states, and Tesla may consider it beneficial to be less dependent on California and its regulations and economic outlook (despite sometimes preferential treatment).
So with California out of the picture, which will be the lucky state?
Gov. Rick Perry (apparently an undercover environmental steward) is personally negotiating with EV manufacturer. But Texas will have to change its laws to get the deal. Currently, Tesla is unable to sell its vehicles directly to the public because it has no franchise dealer relationships in the state. Although this negatively affects Tesla sales and servicing, it seems unlikely that Texas will change the law to land the Gigafactory.
“We would not change the law, because the franchise laws of this state protect consumers statewide,” Bill Wolters, the head of the Texas Auto Dealers Association, told CNBC. “We have more dealers in Texas over 75 years old than we have manufacturers over 75 years old. Dealers are eternal in our state.”
If Texas is unwilling to change its franchise laws, Arizona, New Mexico, and Nevada would be happy to get the deal.
According to AZCentral, Scott Smith, the mayor of Mesa, invited the automaker to visit the greater Phoenix region to see firsthand the “outstanding business environment” Arizona offers. The city of Tucson has also made a formal proposal to house the Gigafactory.
“We are the home to the Mars exploratory mission at the University of Arizona and known nationally as the Solar City,” said Mayor Jonathan Rothschild. “I think Tesla will feel right at home in Tucson.”
Tim Chowdry, managing director of Global Equities, said that New Mexico’s culture, economy, demographics, and politics would make the state an “ideal” location. A Tesla-New Mexico deal for the Gigafactory may also make amends for the automaker’s snub seven years ago.
But as Gas 2 previously reported, Nevada seems like the likely location for the Gigafactory. According to the Reno Memo, an official said Tesla representatives visited Reno “a few months ago” to explore sites at the Stead airport and at the Tahoe-Reno Industrial Center. It also helps that Nevada has already passed a law allowing the testing of autonomous vehicles on public roads — a technology Tesla is pursuing.
With California out, and Texas unlikely to change its franchise laws, I’m putting my money on a table in the Silver State.
Source: The L.A. Times | Image: Christopher DeMorro/Important Media