Tesla starts ‘Gigafactory’ in Reno but still looking at sites in California, other states

07/31/2014 1:36 PM

08/02/2014 10:37 AM

Tesla Motors Inc. has started building its battery plant in Reno, Nev. But that doesn’t mean Tesla has ruled out building the plant in California instead.

The electric carmaker confirmed Thursday that it has broken ground near Reno on its massive “Gigafactory” but said it’s still evaluating sites in California and other states.

The Reno location is one of two or three sites where Tesla plans to perform preliminary construction before making a final decision, said Chief Executive Elon Musk.

“It makes sense to have multiple things going in parallel,” Musk said on a conference call with investment analysts to discuss quarterly earnings.

Stung by the loss of several big companies to Texas, California officials have been making a run at the $5 billion battery factory ever since Tesla left the state off its original list of finalists in February. After state officials raised the possibility of financial incentives, a Tesla spokesman said last month that California had “closed the gap” with its rivals. Musk confirmed that it’s one of five states that could get the 6,500-job factory, along with Nevada, New Mexico, Arizona and Texas.

The Mather Airport business park east of Sacramento is one of the California sites that put in a bid for the factory, Sacramento County officials said in May. Karen Doron, a spokeswoman for the county, declined to comment Thursday.

Brook Taylor, spokesman for Gov. Jerry Brown’s Office of Business and Economic Development, said the Brown administration is “working every day” with companies considering expanding in California, including Tesla.

Getting the battery plant won’t come cheap. Musk said he expects the winning state to contribute “maybe 10 percent” of the $4 billion to $5 billion cost to build the factory. That would translate into at least $400 million worth of incentives over the six years it’s expected to take to build the plant.

According to the Reno Gazette-Journal, the largest Nevada tax incentive ever was $89 million over 10 years for an Apple Inc. facility near Reno.

Lawmakers “are going to have to grapple with that,” said Mike Kazmierski, CEO of the Economic Development Authority of Western Nevada. “There is a trade-off; Nevada is not known for incentives.” Instead, the state’s calling card is “a business-friendly climate and low taxes,” he said.

He said Reno isn’t ready to take a victory lap.

“It’s not a done deal,” he said. “We’re just doing the best we can to stay in the game.”

The disclosure about Reno came a week after the Transport Evolved blog reported that Tesla had broken ground at the Tahoe-Reno Industrial Center, a 100,000-acre business park a few miles east of Reno. Musk said Tesla essentially halted work after completing the “construction pad” on which the factory would sit.

Earlier in the day, Tesla said Panasonic Corp. would be a partner in the factory, supplying cash and lithium-ion battery cells. Later, Musk said Panasonic would contribute up to 40 percent of the plant’s construction cost.

Tesla also said it lost $61.9 million in the second quarter vs. $49.8 million a year earlier. Sales grew to $769.3 million from $620.5 million.

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