Dan Morain

Editorial page editor, political affairs columnist and editorial writer

Dan Morain: Texas Gov. Rick Perry makes a play for Tesla’s battery factory

06/15/2014 12:00 AM

10/08/2014 12:01 PM

One governor swaggers, speaks with a twang and has a head of thick, dark hair. The other governor has long since gone bald, except for his eyebrows, and drops Latin phrases into conversations.

Game on.

Rick Perry, dressed in casual-cool black garb and dark glasses, glided a sleek gray Tesla S into the Grand Hyatt’s parking lot last week and touted his effort to persuade Elon Musk to build his coveted $5 billion battery factory in Texas.

California, the Texan told reporters, has been “losing its luster” for the past 10 years, because of “over-taxation, over-regulation and over-litigation.” So the billionaire founder of California-based Tesla Motors would want to locate his “gigafactory” and its 6,500 jobs in the Lone Star State.

Mike Rossi, Gov. Jerry Brown’s job adviser and the official most responsible for convincing Musk that California is ideal for Tesla’s battery factory, was not impressed with Perry’s latest stunt.

“It’s interesting he had to come to California to drive a Tesla because he can’t drive one in Texas,” Rossi said, throwing an elbow.

He was making a none-too-subtle reference to an archaic Texas statute that bars upstart car companies such as Tesla from selling their wares in Texas. Musk had gone to Austin last year to urge legislators to repeal the law. Musk, a man not used to losing, got creamed.

New car dealers are located in the districts of every Texas legislator, and have given millions of dollars over the years in campaign donations. Perry himself collected more than $250,000 from car dealers in 2011 and 2012, Texans for Public Justice reports. The Austin advocacy group offered this description of Texas’ protectionist law:

“Employees in Tesla car galleries in Austin and Houston are legally prohibited from offering visitors a test drive, quoting them a price or even directing them to Tesla’s website. If a Texan does order a Tesla from California, the car must be delivered by third-party trucks that cannot advertise the Tesla brand.”

Evidently, protections for car dealer-campaign donors is what Perry calls “over-regulation.”

As Perry played to the cameras at the Hyatt, Brown’s aides across L Street in the Capitol inserted a multimillion-dollar property tax exemption into the new budget for solar arrays, to the dismay of lobbyists for California counties and the delight of the solar industry.

One beneficiary would be SolarCity, the nation’s largest solar company. Musk is chairman of the SolarCity board. The company generally owns solar panels it installs on rooftops of homes and businesses, and so would receive property tax breaks.

Brown also salted the budget, scheduled to be voted on today, with language extending another energy subsidy, the Self Generation Incentive Program. The California Public Utilities Commission reports Tesla has $43 million worth of pending applications.

As a pitchman might say, wait, there’s more. The budget includes language extending the program by which electric vehicle owners can buy decals allowing them to cruise solo in carpool lanes.

That’s not all. The California Air Resources Board considered ending $2,500 rebates for zero-emission vehicles that cost $60,000 or more – Tesla – but thought better of it, as the administration set about wooing Musk’s battery factory. There’d be more, such as a California sales tax exemption on factory equipment, and money to train workers.

As Perry was experiencing one of Sacramento’s triple-digit days, Senate President Pro Tem Darrell Steinberg and Republican Sen. Ted Gaines of Roseville pushed a bill opening the way to build the battery factory at Mather Field.

Assemblyman Adam Gray, D-Merced, delivered a letter to the governor describing the Central Valley city of Patterson as having a “strong, business-friendly environment,” and 10.6 million square feet of industrial and warehouse space that is “shovel ready for this type of project.”

“Everything that can be done is done,” Rossi told me. “I’m feeling very good about it. I think the issues that can be addressed are being addressed.”

The competition for the battery factory became public in February, when Tesla announced it was preparing to build its “gigafactory” in one of four states: Nevada, Arizona, New Mexico or Texas.

Simon Sproule, Tesla’s vice president for communication and marketing, softened that in April: “Yes, California has shown interest. And, yes, conversations are going on with the state.” A week later, Musk described California’s chance of landing the factory as “improbable” because of the heavy regulation.

Sproule’s tone was very different when we spoke last week: “Where we were then and where we are today, it is a very different situation. We recognize the work that has been done by the state to improve the chances of getting the factory.”

Sproule said the biggest issue remains whether the factory can be built quickly, so that batteries will be available for the next generation of lower-priced Teslas, a prototype of which is supposed to be introduced in 2015.

“California was in the improbable category. It has transitioned from improbable to being in a situation where California is putting itself into play,” Sproule said. “In the end, California has closed the gap.”

The day after he stopped in Sacramento, Perry went to San Francisco, where he spoke to the Commonwealth Club. He extolled the wealth being generated by fracking in his state and said the same could occur in California. He also talked about the need for “electrical storage” – batteries.

“You are going to need a lot of electricity to power those Tesla cars that are going to be built in Texas,” Perry said, taunting Californians.

Perry strutted into California, saw a Tesla, and seems to think he conquered it. Brown, however, sees it differently. As he might say: veni, vidi, but not vici quite so fast.

About This Blog

Dan Morain has been a columnist at The Bee since 2010 focusing on state government and politics. He previously worked for The Los Angeles Times covering the California Supreme Court when Rose Bird was chief justice, the Legislature when Willie Brown was speaker and the governor's office during Gray Davis' tenure. Dan Morain can be reached at dmorain@sacbee.com or 916-321-1907. Twitter: @DanielMorain.

 

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