Paul Sancya / AP

The Tesla Model X

Sacramento’s Mather Airport in long-shot bid for Tesla’s big factory

Published: Thursday, May. 22, 2014 - 5:23 pm
Last Modified: Saturday, Aug. 2, 2014 - 10:37 am

It would be among the biggest economic development bonanzas Sacramento has seen in years, courtesy of one of the most glamorous companies around. But the odds are very long.

Wading into a fierce multistate competition, Mather Airport’s business park is in the running for the massive battery factory planned by Tesla Motors Inc., the maker of luxury electric cars. Tesla’s so-called Gigafactory is expected to employ 6,500 workers at full build-out and would become Mather’s most significant occupant since the Air Force left in 1993.

Sacramento County officials working on the project acknowledge the chances of landing Tesla are slim. Not only is Mather Commerce Park one of several California sites being considered, Tesla’s chief executive has said it’s more likely the $5 billion factory will be built out of state.

CEO Elon Musk said May 7 that California’s chances are “sort of improbable.” The manufacturer wants to break ground as early as June, and Musk said he doubts California could deliver the necessary permits and regulatory approvals in time.

“One month – that’s a pretty big mountain to climb,” said Sacramento County Supervisor Don Nottoli, whose district includes Mather. “Nothing’s impossible.”

Tesla officials couldn’t be reached for comment.

Tesla Motors is a California creation. The company, based in Palo Alto, depends on wealthy, eco-conscious Californians to buy its cars, which cost $70,000 each. The company’s main assembly plant is housed in an old auto plant in Fremont that was formerly run by Toyota and General Motors, and the state has helped Tesla along with tens of millions of dollars in state sales tax breaks. So state officials were rankled when Tesla announced the Gigafactory project in February and left California off the list of states under consideration.

The four finalists: Nevada, Arizona, New Mexico and Texas.

Smarting over the defection of several high-profile corporations to Texas in recent months, including Occidental Petroleum and a portion of Toyota’s U.S. headquarters, state officials have jumped in. Gov. Jerry Brown, U.S. Sen. Dianne Feinstein and others prodded the company to rethink its decision, and Tesla agreed to consider California.

The governor’s office of business and economic development contacted Sacramento officials about Mather, and the company is aware of the site’s attributes, said Rob Leonard, chief deputy county executive. Mather, which is run by the county, has been converted into a cargo airport and business park since the Air Force left in 1993. Its various businesses employ an estimated 5,000 workers, compared to the 7,500 working at Mather when its closure as an Air Force base was announced in 1988.

Leonard said he’s been told several other California sites are being considered as well.

Brook Taylor, deputy director of Brown’s economic development office, wouldn’t comment on Mather or go into detail about the state’s pursuit of the Gigafactory.

“The administration is working every day to bring companies to California and help them grow here,” he said in an email. “Tesla is certainly one of those companies.”

In April, the company leased a 430,000-square-foot industrial site in Lathrop. The building, a former DaimlerChrysler distribution center, will reportedly become a parts-assembly facility.

However, Musk recently made it clear that California’s chances of landing the much larger Gigafactory aren’t strong.

“I think California’s still in the sort of improbable, but not of being impossible, category at this point,” he said in a conference call with investment analysts May 7.

He added that “the governor and his staff have really, I think, tried to do everything they can to make California a significant candidate for the Gigafactory.” But he said other states offer a “much more streamlined approach” to regulatory approvals.

Tesla is seeking about 500 acres for its factory. Leonard said the sprawling Mather property has plenty of land available to accommodate that need.

One potential tool to lure Tesla – tax breaks for companies reusing old military bases – expired when the state killed local redevelopment programs.

Tesla is anxious to ramp up the battery plant quickly, so anxious that Musk said the company plans to break ground at a second location a few months after the first. Tesla isn’t planning to operate two factories; rather, it’s breaking ground at two locations in order to provide insurance in case something goes wrong in construction at either site.

Tesla lost $49 million on revenue of $618.8 million in the first quarter. It has one model, a sedan that sells for $70,000, but is planning a $40,000 model in a few years. The company has said its growth is being held back by a relatively limited supply of batteries.

Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

Read more articles by Dale Kasler

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