What s a gigafactory worth?
That s the question for officials in five states who are battling to be home of Tesla s new gigafactory for battery production.
The answer may be too much, warns a group of government fiscal watchdog types who wrote a joint letter this week urging officials to show restraint on offers of tax breaks and other incentives, as our Dana Hull wrote in an article.
In their view, states are being asked to cough up too much — $500 million — to win the factory.
Chris Hoene, executive director of the California Budget Project, told Dana:
This process is so crazy. Tesla is in the driver s seat on this, and five governors are falling over themselves. The gigafactory is a big fish to land, but it s a pretty high price to pay.
Or is it?
In a recent column, I argued the opposite. The $5 billion factory isn t just about the expected 6,500 manufacturing jobs but investing in a future-oriented industry that will attract its own ecosystem of suppliers. That promise has states scrambling, largely behind closed doors, to craft incentive packages.
I was reminded of what happened when General Motors was shopping for a state for its new Saturn plant. Tennessee won and the facility produced Saturn vehicles from 1990 until 2007. That s a good stretch.
Of course, elected officials know the sky shouldn t be the limit. Come the next election, they will face a reasonableness test if they gave away too much and got too little.
And that s in Tesla s interest too. Look at the scrutiny and criticism aimed at Twitter and San Francisco Mayor Ed Lee for the incentives the firm received.
Tesla has already shown that it s not just grabbing at any break it can get. Recently it said it would not seek exemptions to California s landmark environmental standards, despite reports that it was doing so, as Dana wrote about as well in a blog post.
It would be completely counter to the mission of the company to go against environmental legislation, said a Tesla spokesman.
Above: Megan Gates, 35, is photographed next to a partially built Model S on display at Tesla Motors in Fremont, Calif. on Wednesday, July 2, 2014. (Gary Reyes/Bay Area News Group)
