The Final Four: Sunbelt states compete for Tesla’s gigafactory

Tesla Motors says that its $5 billion gigafactory for battery production will be located in one of four Sunbelt states: Arizona, Nevada, New Mexico or Texas. That means that four Republican governors – Jan Brewer, Brian Sandoval, Susanna Martinez and Rick Perry – and their offices of economic development are falling over themselves to make the case as to why their state should land the massive $5 billion facility and the 6,500 manufacturing jobs that come with it.

These contests almost always come down to which state can offer the best tax breaks, and each state is going to offer a package of incentives. So what else is at play: clean vehicle policies? Electricity prices? State dealer franchise laws? Proximity to rail? Tesla’s sketch of the proposed facility shows it being powered by both solar and wind.

Let March Madness begin! Here’s our attempt to handicap the chances. What’s your bet? What did I miss? Feel free to ping me at

Arizona: Apple is expected to get big property, equipment, energy and payroll tax breaks for located its 700-worker manufacturing plant in Mesa, raising the possibility of Mesa becoming a manufacturing hub. Gov. Jan Brewer just vetoed Senate Bill 1062, which would have allowed business owners to deny service to gay men and lesbians; some business leaders had worried that passage of the bill would discourage tech companies from considering Arizona.  Arizona has more solar per capita than any other state, according to Vote Solar, thanks to generous net metering policies. NRG’s 290-megawaatt Agua Caliente solar farm is in Yuma County. The Phoenix Business Journal reported in November that Tesla was looking in the Phoneix area for the battery plant, including a former Motorola space in Chandler. A spokesperson for the Greater Phoenix Economic Council declined to comment Thursday.

Nevada: The Silver State is aggressively courting Tesla, noting its skilled workforce, low operating costs and pro-business climate. Senator Harry Reid holds a National Clean Energy Summit every August in Las Vegas; Tesla CEO Elon Musk spoke at the summit in 2012. Reno would be relatively close Tesla’s Bay Area base of operations. Jigar Shah made a great point via Twitter: casinos need a lot of electricity, and are prime candidates for energy storage systems. As we reported yesterday, Gov. Sandoval has met with the Tesla team.

New Mexico: The Union Pacific intermodal facility will open soon in Santa Teresa, connecting southern New Mexico to the West Coast, which would be ideal for shipping batteries. Tesla considered New Mexico when it was scouting locations for its assembly factory, which is in Fremont. And last year, New Mexico approved the “single sales factor” tax formula, which benefits corporations when assessing corporate income taxes. Another bill, currently under consideration, would allow public utilities to negotiate lower electric rates with major manufacturers. SpaceX has agreed to a three year least to test its “Grasshopper” reusable rocket at Spaceport America in southern New Mexico.

Texas: Tesla has been fighting Texas over the right to sell cars; Texas has a state law that basically bans car manufacturers from running and owning dealerships. Elon Musk has even appeared at the state capitol in Austin to try to change the law. I’d imagine that if Texas wants to land the gigafactory, allowing Tesla to sell in the state would have to be part of the deal. Texas is also the wind capital of the country; 1 in 4 wind turbines in the United States is located in West Texas.

California: Is not on the list, but is this just a shrewd move by Tesla to extract more concessions from the Golden State? I’ve asked Kish Rajan, director of Governor Brown’s Office of Business and Economic Development, to comment.

Union Pacific map of major intermodal centers. Many analysts who are following Tesla’s gigafactory plans say the massive facility will need to be built near a rail line. 







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  • RegularGuy55

    The idea of selling cars through independent dealerships instead of directly from the automaker was the result of the product liability laws of the early 1900s. Back then, an injured party could only sue the merchant who sold the item, not the manufacturer of the item if they were harmed. The notion is called ‘privity’. There was no privity between a car buyer and the manufacturer as long as the car was sold by an independent dealer.

    Justice Benjamin Cardozo (as a NY State Appellate Judge) struck down the privity requirement in a product liability tort case involving Buick Motors in 1916. But by then the ‘independent dealer’ model was firmly entrenched.