By on March 7, 2014

tesla-model-s-01

Announcements of businesses leaving regulation-happy and costly California or declining to do business in California are as common here in the Golden State as seeing a Prius blocking the left lane on the 405. This move is a bit of a surprise as California-based Tesla Motors said this morning that they have eliminated the state as a possible site for their $5-billion dollar battery factory, meaning only Texas, New Mexico, Arizona and Nevada remain in the running.

It was only two weeks ago that the electric automaker announced plans to build the 500 to 1,000-acre site designed to produce up to 500,000 batteries per year and employ up to 6,500 workers to support the launch of upcoming models. The Los Angeles Times says the California governor’s office is not commenting but you can be sure there are some embarrassed bureaucrats in Sacramento when they learned today that the sites they proposed to Tesla were the first to be rejected. Tesla is also mum as to why California was rejected as of this writing.

Besides California being Tesla’s number one state for car sales, the company employees over 6,000 workers at their Fremont factory, their Palo Alto headquarters and their Southern California design studio.

This begs the question: will Tesla possibly bargain with Texas to change their franchise laws to allow them to open traditional dealerships in exchange for the battery factory?

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77 Comments on “Tesla Says Battery Gigafactory Will Not Be Built In California...”


  • avatar
    Pch101

    Large corporations have more political clout when they spread their operations across state lines (and, for that matter, across international borders.)

    Tesla wants to ignite a bidding war for the opportunity that it promises to provide employment. The company received considerable incentives to set up shop in California, and would surely like to have a repeat.

    The inclusion of Texas seems to be at least partly motivated by the brick wall that the company has hit in changing that state’s dealer franchise laws. Previously, it kept dangling the possibility of operating a car plant there, but to no avail.

    • 0 avatar

      TX is dug in. They’re coming to NV IF Panasonic decides to partner. As someone pointed out, Panasonic is more likely to partner with Toyota than Tesla on a battery plant.

      • 0 avatar
        SCE to AUX

        Panasonic just happens to be their current partner, but there are many other 18650 mfrs who would line up to supply Tesla. I really don’t think it’s Panasonic or bust.

  • avatar

    I know a mid west city with conditions for manufacturing ideal.

  • avatar
    28-Cars-Later

    Why not Mexico?

    • 0 avatar
      jim brewer

      Or so-called “New” Mexico. Pretty much the same thing. Intel got so many concessions that they pay no more income tax than if they were outside the state and their manufacturing plants are located in a city which gave them so many tax exemptions the city still has lots and lots of dirt roads.

      • 0 avatar

        Actually Rio Rancho has better roads than the state capital of Santa Fe, where dirt roads are right next to imposing government buildings on the other side of their joke river from the Plaza. In RR, the nearest dirt road is 10 miles from Intel’s site or more (unless you count the hippy enclave of Corralles, which may be closer).

        Nonetheless, Intel is now talking of never adding any capacity to their plant, and considering Arizona instead. Personally, I am against giving Tesla one of my tax dollars. If they want to come to da ‘hood, they are welcome, of course.

      • 0 avatar
        28-Cars-Later

        Slow down there man, there’s a *New* Mexico?

        youtube.com/watch?v=hEJzXbqyU8A

        • 0 avatar
          Lorenzo

          That’s just a ‘toon. A writer to Dear Abby recounted how she was told by someone at Social Security that since she was born in New Mexico, she had to submit her naturalization papers.

          • 0 avatar
            redav

            My sister was born in NM. She has had countless experiences like that where others didn’t know it was a part of the US.

      • 0 avatar
        fvfvsix

        @jim brewer – the state of Oregon did the same thing for Intel, so why throw shade at New Mexico about silly things like dirt roads? You do know that rural areas are part of the charm of the state, right? Not everything needs paved over.

    • 0 avatar

      Perhaps not Mexico but if making batteries is so labor intensive, why build the plant in the U.S.? Why not a market like China which is in growth mode and most car buyers are buying their first car?

      • 0 avatar
        Lorenzo

        It’s not so much labor intensive as chemical intensive. State environmental restrictions on transport and storage of the raw materials, and stringent manufacturing standards, are probably the reason for avoiding California, not just taxes. Other states may be far more amenable to relaxing their standards too.

  • avatar
    daviel

    Move the whole company to Texas. More friendly to business than CA.

  • avatar
    SCE to AUX

    I predict Nevada, as it’s closest to the Fremont plant.

  • avatar
    walker42

    So much for the notion that Tesla’s value was only in the brand name and that the company was being set up as a small boutique manufacturer for sale soon to the highest bidder. Boutiques usually don’t care much about their political power, or building $5 billion factories to make batteries.

  • avatar
    sirwired

    It’s entirely possible that instead of some “embarrassed bureaucrats”, excess regulations, and high costs, that Tesla simply wanted more in incentives than CA was willing to pay.

    You’d think they would have moved the main plant by now if they thought CA was such a hostile business climate.

  • avatar
    Clueless Economist

    Tesla apparently wants to escape the over regulated socialist state of California by running to which ever “conservative” crony capitalist state offering the biggest kickback at taxpayers’ expense. Apparently we are all socialists (or is “fascist” more correct?), just in different ways.

    • 0 avatar
      VCplayer

      I appreciate your username/avatar combo, very clever.

    • 0 avatar
      Pch101

      It’s odd that the California “socialists” permit direct sales, while the fierce capitalists of Tejas do not.

      (This reality doesn’t fit neatly into your metric, but I’m sure that pesky things such as facts aren’t going to temper your rhetoric one bit.)

      • 0 avatar
        CJinSD

        It just goes to show we’re living in a fascist state. California lets Tesla sell direct because Tesla is a favored company. We’re a government of people, not laws. Bad people.

        • 0 avatar

          > It just goes to show we’re living in a fascist state. California lets Tesla sell direct because Tesla is a favored company. We’re a government of people, not laws. Bad people.

          Ok so it’s fascism when people you don’t like get to do what they want. Because if Tesla get blocked by Texas it’s…freedom.

          War is peace, ignorance is strength, freedom is slavery.

          • 0 avatar
            CJinSD

            No. Both states are demonstrating fascist behavior: California because they are selling out their principles for Tesla, and Texas because they’re protecting big dealer groups. Either way, lovers of the class mobility are getting the shaft.

          • 0 avatar
            CJinSD

            No. Both states are demonstrating fascist behavior: California because they are selling out their principles for Tesla, and Texas because they’re protecting big dealer groups. Either way, lovers of class mobility are getting the shaft.

          • 0 avatar

            > No. Both states are demonstrating fascist behavior: California because they are selling out their principles for Tesla, and Texas because they’re protecting big dealer groups. Either way, lovers of the class mobility are getting the shaft.

            Unfortunately these United States have long been fascist ever since plebs got the vote. For too they’ve had their way with “laws” that limit the god-given advantages of having a lot of money, or the righteous retribution for not having any.

            These terrorists have long forgotten the days when the pleb was free to aspire to the heights of aristocracy rather than wear the shackles of public education or state safety net. Woe upon thee who dares trounce my liberty to both collect a military paycheck and mouth off about gubmint largess at once.

          • 0 avatar
            Pch101

            Somebody needs to learn the proper “f” word, that “f” word being “federalism.”

            The majority of regulations for auto retailing come from the state level. Texas and California have taken different paths in that regard.

            You would think that the believers of “states rights” would celebrate these differences as a sign that federalism works, but apparently some of you pick and choose when “states rights” excite you, and when they don’t. The people of Texas elected those legislators who could have opted to change the franchise laws if they preferred, but that obviously wasn’t a priority.

      • 0 avatar
        jkross22

        Every state, even your favorite ones, have an a la carte approach to law enforcement. Much to your chagrin, this includes the ones that tilt left.

        Dems da facts.

        • 0 avatar
          Pch101

          I merely pointed out that the allegedly “socialist” state doesn’t behave in a particularly socialist fashion.

          If posters here are going to lob around jargon such as “socialism,” then they ought to demonstrate that they understand what socialism actually is. When you expose your ignorance to others, it only reflects poorly on you and sets you up for much-deserved ridicule.

          • 0 avatar
            tedward

            While it is true that California can be more difficult to do business in than other states, it is also true that Texas can be a more difficult and dangerous place to work as an employee (or neighbor) of a business. Neither of those trends is accurate when you lay it out as a rule, exceptions abound.

            Now that I’ve balanced that out Pch is dead right in his criticism. Socialism as it is used by extreme conservatives is actually an accurate description of how all successful modern governments operate. The “socialist” smear is silly and without substance.

            California’s business climate issues stem from a powerful populist political tradition (sometimes confused with direct-ish democracy.) Texas’ issues stem from bribery and political venality (sometimes confused with an ideological support of free market utopianism.)

          • 0 avatar
            thornmark

            >>California’s business climate issues stem from a powerful populist political tradition (sometimes confused with direct-ish democracy.) Texas’ issues stem from bribery and political venality (sometimes confused with an ideological support of free market utopianism.)<<

            Texas’s business climate issues stem from a powerful political tradition of limited government. The legislature meets only every two years for limited periods. That means legislators have real jobs and do not look to grow government to expand their power. They are citizen legislators rather than denizens of government.

            California's issues stem from bribery and political venality {Dem/Public Employee Union stranglehold} Dems provide ever increasing taxpayer dollars to ever increasing government workers in exchange for recycled campaign cash. FDR said government unions were against the public interest and history has proved him correct.

            btw, Reagan later considered it a great mistake to have backed the 1966 ref that made the CA legislature full time during his first landslide election there. His successor, Jerry Brown, created the Dem/Public Union stranglehold by instituting collective bargaining for most public employees. No single act has changed California for the worse more than this one.

          • 0 avatar

            > Socialism as it is used by extreme conservatives is actually an accurate description of how all successful modern governments operate.

            You’re trying too hard to give credit where none is due. “Socialist” is just an arbitrary word not unlike “terrorist”; a negative connotation directed at “the baddies”. For example, there’s not much similarity between California and the USSR yet both are “socialists”.

            The main difference between California and Texas is that one is ostensibly a first world nation and thus has much of the same problems/solutions as first world peers. Texas esp the rural parts is more like a developing country if not for federal mandate and thus has much of the same ignorant backwater mindset:

            http://www.thetruthaboutcars.com/2014/02/vw-labor-leaders-fight-to-establish-u-s-works-council/#comment-2858953

          • 0 avatar

            > California’s issues stem from bribery and political venality .. blah blah blah…No single act has changed California for the worse more than this one

            Case in point, so much mouthing off yet not a hint of recognition that California would have a budget surplus if it didn’t have the drag the undeveloped parts of the country along (you know, the red parts). Contrast this to the habit of deficit spending started by their hero Reagan.

            These people are simply delusional not unlike the drunk bum on the street they love to hate on. At least those guys have a decent excuse in mental illness.

          • 0 avatar
            Big Al from Oz

            I think you guys should look up the definition of socialism. The word is bastardised.

            Socialism is the collective OWNERSHIP of everything in a society.

            The right has grabbed hold of a word like Social Democracy and converted it into socialism.

            The left in the US does the same with the Tea Party.

            The same goes for the differentiation of patriotic or nationalistic. A nationalist in the US would be someone who believes in American Exceptionalism. Someone patriotic would believe in his country, but also see that there may be something better elsewhere.

            Many on the right of the US fail to see why the Europeans’ do business differently and now the US is following suit.

            In Europe after being devastated by 2 world wars the only institutions capable of ‘project managing’ the countries back to health were the governments. Hence the strong government involvement in their societies.

            Governments in Europe are now institutionalised and part of the cultural landscape.

            Europeans’ have been brought up with a sense of entitlement, just like unions have this sense of entitlement.

            Now the US to compete must subisidise many industries. But, this subsidised money comes from somewhere. It is far more efficient to have a person or industry manage wealth than a government.

            Social welfare and subsidised industry isn’t socialism. It’s poor management, because all it will do is create false markets.

      • 0 avatar
        thornmark

        Here’s another rich CA socialist looking for more tax breaks to line his pockets:

        Harvey Weinstein to California: Expand Production Tax Incentives, ‘Please’
        http://variety.com/2014/biz/news/harvey-weinstein-at-ucla-1201128308/

    • 0 avatar

      > which ever “conservative” crony capitalist state offering the biggest kickback at taxpayers’ expense.

      Don’t worry, they’ll get their big welfare checks from elsewhere in the country through the federal tax system.

  • avatar
    OneAlpha

    Ever notice how defenders of Soviet Kalifornistan always respond to stories of the crushing regulations, confiscatory taxes, unaffordable housing, fleeing middle class, disintegrating infrastructure, politically-induced droughts and energy-development bans of their state with the standard cliche of, “Oh yeah? Well, the weather’s really great here!”

    Aside from the fact that year-round summer and no rain isn’t my idea of great weather, that’s usually the most coherent response you’ll ever get to the question of, “why do you live in that Marxist shithole?”

    • 0 avatar
      Master Baiter

      I don’t agree with the politics here, but I do like living in Northern CA. I’m 20 minutes from the Santa Cruz Mountain wineries; 45 min to the ocean; 90 minutes to Napa. Cost of living is high, but my salary makes up for it–3X what I was making in GA in a similar job. 300 days of sunshine a year; mild winters, no thunderstorms, no snow. I’m not going to leave a better life just because the state is run by fruits and nuts.

  • avatar
    sbmellen

    I predict Arizona, right next to Apple’s (or GT Advanced Technology) Sapphire glass plant.

  • avatar
    jkross22

    I’m a bit surprised that ol Jerry Brown or our jesters in the state legislative branches couldn’t give enough way or bend enough environmental laws to keep Tesla’s plans in CA.

    They have had little problem railroading (!) over environmental laws in pursuit of high speed rail.

    • 0 avatar
      Steve65

      “Alternative energy” too. Full speed ahead rubber-stamping EIRs for ginormous projects in some of the most fragile landscapes. While perfectly acceptable sites with already degraded ecosystems are ignored. Why place them logically when there’s pristine dessert to bulldoze?

      • 0 avatar
        Lorenzo

        There’s a strange contradiction. Honda had a desert test track but abandoned using it due to restrictions caused by the desert tortoise. But a solar power plant was allowed to be built in the desert, even though it displaced several elderly couples who owned part of the land needed. The solar collectors aimed at a boiler on a tower have fried a number of birds, but there have been no restrictions imposed. I haven’t figured out the logic yet, but I suspect money is involved.

  • avatar
    GoFaster58

    Central Texas is rumored to be a site for the Tesla battery factory. Also rumor has it that pay will be less than $16,000 per year. Any insight to this?

  • avatar
    Z71_Silvy

    Can it be built in another country? The last thing America needs is yet another factory sitting empty because of a bad business model.

  • avatar
    dwford

    It is amusing that Tesla won’t locate its new factory in the very state to which it owes its existence. If it weren’t for California’s laws mandating electric cars, there would be much less a business case to be made for Tesla.

    • 0 avatar
      Z71_Silvy

      Even still…their business case is a house of cards as it is. They may as well be called Solyndra Motors

      • 0 avatar
        dwford

        I agree, I think there is a natural limit to how many people are interested in electric cars. The majority of auto consumers are still coming to terms with what “hybrid” means, if my 7 years in car selling is any indication.

        • 0 avatar
          Kenmore

          ICE, hybrid, EV or Rocket J. Squirrel on a hamster wheel, I think it’s all about cost.

          Give people the same performance, safety and convenience as established ICE cars for less money and any power source is only one test drive away from enthusiastic acceptance.

          Of course, it doesn’t appear batteries will ever be that source.

          • 0 avatar
            redav

            Also, this plant changes Tesla’s business model. They will provide batteries to a wide range of businesses, not just cars.

  • avatar
    Jeff Waingrow

    The loyalty of some people to the businesses that extract onerous tax and other concessions from one state only to move at a moment’s notice to another when the whiff of new treasuries to raid hits their nostrils, is truly touching. When will people wise up that the dangling of promised jobs is a sales con of the highest order? The Clueless Economist is , as usual, right on the money.

    • 0 avatar
      Hillman

      A lot of times the major “incentives” are reduced or no property taxes on the plant. Sometimes there is no or a reduced income tax on the plant but that can be very rare. The benefit of this is it really is a win win for the tax payer. They get a increased tax base and development and all they give up is the tax on what would be a vacant property. This is as close to a free lunch as you can get in economics for all parties involved.

      • 0 avatar
        Jeff Waingrow

        Hillman, with all due respect, I’m afraid it’s a “win-win” until the company decides that another venue is preferable, at which time it then becomes a “lose-lose”. So many states and local governments have been played for suckers, installing new infrastructure such as roads, water lines and such only to find that the plant either moved, markedly downsized or went bust, leaving the taxpayers with bonds to be payed for far into the future. I’m no expert, but even I can see in my locale, examples where the towns and cities got snookered big time. These pots of gold, in the end, often prove quite elusive. Better that the money be invested in human capital, ultimately the greatest business lure of all.

      • 0 avatar
        silverkris

        That really depends on how much the government is willing to give to the manufacturer to locate a plant in the state. Mercedes-Benz got so much in incentives, rebates, training programs, etc. from the state of Alabama that they had to cut the education budget one year. I’d hardly call that a win-win for the taxpayer.

        Yes, there were jobs that came there, but at a very high cost, and fewer than originally projected.

  • avatar

    It’ll be located around San Antonio, Texas.

    • 0 avatar
      highdesertcat

      That’s a very good possibility since TX and NV are the only two states with the most going for them; NV for its proximity to the plant and TX because of its great tax incentives.

      I’d like to see Rio Rancho in New Mexico in the running but there is no way that NM can even come close to the incentives that TX can offer.

  • avatar

    > This begs the question: will Tesla possibly bargain with Texas…

    Yo, that not be what question begging is. It aint literal but some highfaluting thinking fallacy and not using it ironically will have some ivory tower mofos shaking they head like you illiterate.

  • avatar
    JD321

    “Socialism is the collective OWNERSHIP of everything in a society”

    Communism is collective ownership. Socialism is legalized theft. Communism, Democracy, and Fascism are Socialist. This should be obvious by now…even to the public schoolers.

    The corporate owners and directors want to pass the government/democracy parasite plundering on to the wage-earner chumps. It is their fiduciary responsibility.

    • 0 avatar

      > Communism is collective ownership. Socialism is legalized theft.

      Property ownership or any other law as implied in the first part is what society makes of it. That’s why the second part is so confused: how can something be illegal that isn’t wrong? For example, emancipating black people was also theft during a certain time period, and for quite a while various groups reminded others of this.

      > Communism, Democracy, and Fascism are Socialist. This should be obvious by now…even to the public schoolers.

      Correct enough on the first two, but fascism is just totalitarian. I’m pretty sure if you were made the decider, society would be the opposite of egalitarian.

      > the government/democracy parasite

      At least this one’s honest about what conservatism is about.

  • avatar
    Zykotec

    I think school teachers, politicians, philosophers and scholars of all kinds should read one of the threads on TTAC to learn all the ‘real’ definitions of left and right wing politics, not to mention all the definitions of socialism, because it seems everyone here knows sooo much more than what is considered ‘correct’ everywhere else…(sarcastic tone could be intended)

    On Topic though, A battery factory anywhere in the US owuld probably be ‘greener’ for the environment than shipping the batteries around the world, but I guess all the raw material comes from china or something anyway. You should be happy that someone is trying to lower the number of unemployed people.

  • avatar
    stevelovescars

    All the Texas propaganda about California reminds me of the old Yogi Berra attributed saying about how “nobody goes there anymore because it’s too crowded.”

    The logic is unsound. Home prices aren’t the highest in the nation because nobody wants to live and work in CA.

    Texas’s refusal to allow Tesla to sell cars directly under the guise of protecting dealer franchises when Tesla has no such franchises is just plain asinine. That state simply has a reputation for lax regulation because regulation there is for sale to the highest bidder. The comment about the fertilizer factory was actually on point, I believe.

    Southern states with their “business friendly environments” and focus on “traditional family values” have, on average, the highest rates of poverty, lowest rates of literacy, highest rates of teen pregnancy, and the lowest rates of health insurance coverage for their citizens. I can understand why millionaires want to relocate there… To protect what they already have… Why anyone else finds Texas appealing is beyond me. And I did live there for a while, so I am not speaking from complete ignorance.

    While the coldest winter I ever knew may have been the summer I spent in San Francisco, the summer I spent in Houston would just rather be completely forgotten. Decent barbecue, though I liked the pork better in Tennessee.

  • avatar
    silverkris

    Look for a location with rail access – given that the batteries are very heavy and that the final assembly plant is next to a rail line.


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