Tesla Motors Inc.’s Elon Musk says he is close to naming sites in at least two U.S. states for a planned battery “gigafactory” — which Tucson and Pima County have been vying for.
City and county officials here said Wednesday night that they do not know whether Tucson made the cut.
Unexpectedly, the electric-car company will break ground at two sites it picks, to ensure one is ready to supply lithium-ion packs when needed, Musk told Bloomberg News in an interview this week.
Musk declined to say which states are the leading candidates and when the company will announce its decision, Bloomberg reported.
Tesla said in February that it would build the world’s largest battery plant and was assessing sites in Arizona, Nevada, New Mexico and Texas. The new plant, requiring as much as $5 billion to build, would ultimately employ as many as 6,500 people.
“What we’re going to do is move forward with more than one state, at least two, all the way to breaking ground, just in case there’s last-minute issues,” Musk, Tesla’s CEO, told Bloomberg this week. “The No. 1 thing is we want to minimize the risk timing for the gigafactory to get up and running.”
Tucson Mayor Jonathan Rothschild said that as of Wednesday night, Tesla hadn’t contacted anyone involved with Tucson’s campaign to attract the company to the region. The county, city, Tucson Regional Economic Opportunities Inc., Southwest Gas Corp. and Tucson Electric Power Co. worked with the Arizona Commerce Authority on the formal offer, including tax incentives.
Rothschild wouldn’t reveal the amount of the local incentive package offered to Tesla, but he said it was competitive and that the company did express interest in opening a plant here. Land within the city was identified with access to the Union Pacific mainline and the interstates. “We put together a good proposal. And I hope we’re still in consideration,” Rothschild said.
Pima County Administrator Chuck Huckelberry also said Wednesday night that he had no advance warning from the company about any impending announcement. “The region submitted a competitive proposal to Tesla, and we’re awaiting their decision,” Huckelberry said.
The San Antonio Express-News reported this week that San Antonio, Texas, and Reno, Nevada, are the strongest contenders, “according to experts and people involved in the site-selection process.” However, that report, distributed to clients of the New York Times News Service, quickly added: “Still, nothing’s certain in one of the strangest economic-development projects to come along in years, prone to unexpected twists.”
The Express-News said San Antonio-area officials had offered Tesla “incentives valued at nearly $800 million, according to two people familiar with the package.”
Rothschild did say Wednesday night that Tucson’s offer was valued at much less than $800 million.
He said cities and counties in Arizona are constrained in how much they can give a company as an incentive to locate their operations here.
Rothschild said this is an example of why the state needs to increase its closing fund, which are dollars that can be used as an inducement for businesses to relocate here, from the current $20 million to $25 million to an amount that would make Arizona more competitive with states like Texas and Louisiana.
But Rothschild has said Tucson has attractive assets nonetheless in the bid for Tesla, including the University of Arizona’s tech expertise; Raytheon Missile Systems’ active testing of lithium-ion battery technology; and the fact that several Tesla suppliers already are in our region.
A hurdle for both Arizona and Texas has been that both states require manufacturers to sell their vehicles through franchised dealerships. Nevada does not. Tesla’s business model is to sell direct to buyers, either through company-owned dealerships or over the Internet.
Tesla’s home state of California isn’t a candidate for the new plant because of timing requirements for regulatory reviews, Musk said.
Tesla plans to add a mass-market electric car in about three years. He said lower-cost battery packs are needed to ensure Tesla’s proposed less expensive model gets to market on time.
The carmaker plans to boost production of battery-powered Model S sedans at its plant in Fremont, California, by at least 56 percent this year.
Reno is connected by railroad and highway to Fremont, but some experts have said Reno lacks the type of workforce Tesla seeks. Another factor, though, may be that the only commercially active lithium mine in the United States is in Nevada, the Reno Gazette-Journal reported.
While starting construction at different locations with an initial goal of using only one is unusual, Tesla may ultimately need more than a single gigafactory in the U.S., Musk said.
“We will end up spending more money than would otherwise be the case to minimize the timing risk,” he said.
Tesla’s so-called third-generation car, following the $71,000 Model S sedan and Model X electric sport-utility vehicle due in 2015, would sell at a price comparable to Bayerische Motoren Werke AG’s BMW 3-Series sedan, or about half the base price of the Model S, Musk has said.
Musk traveled to China last week to mark the start of Model S deliveries there. He also told reporters in China last week that the company was considering two locations, The Associated Press reported.
The design and preparation to produce that new model has to be done in parallel with the gigafactory, he said this week.
“There are a lot of moving parts, a crazy amount of moving parts,” Musk said. “If there’s a laggard there, we’ll have this massive facility and a ton of people trained and no ability to recoup revenue. It will be quite a bad situation.”
