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Page added on September 7, 2014
Tesla’s Gigafactory Finds a Home in Nevada
In a press conference Thursday afternoon, Nevada Governor Brian Sandoval and Tesla Motors CEO Elon Musk announced that the company’s groundbreaking battery manufacturing facility (called a “Gigafactory”) will be located in Nevada. Shortly after Tesla announced plans to build the Gigafactory in February, several states in the southwest scrambled to compete for the final location. Arizona, Texas, California, and New Mexico gambled for Tesla’s favor, but the house always wins in Nevada.
The $5 billion Gigafactory will produce advanced batteries for electric vehicles, allowing Tesla’s production to become much cheaper and more vertically integrated. The factory also plans to supply solar manufacturers and utilities with stationary battery packs. The factory is expected to bring 6,500 and one hundred billion dollars in economic impact over the next 20 years, according to Governor Sandoval.
“These 21st century pioneers, fueled with innovation and desire, are emboldened by the promise of Nevada to change the world. Nevada is ready to lead,” Governor Sandoval said in his address.
Mark Rogowsky, wrote in Forbes that Nevada was “always the best bet” and that Tesla was “almost certainly destined to end up selecting Nevada anyway,” arguing that the Nevada site offers a unique convenience. The new site is a relatively short five-hour drive from Tesla’s factory in Fremont, CA, plus the site sits near convenient rail connection. Nevada also boasts the only active lithium mine in the U.S., which will come in handy as the company doubles the number of lithium-ion batteries produced globally. According to Alex Walsh, president of the Lithium Exploration Group, the Gigafactory alone is expected to raise global demand for lithium carbonate by 15,000 tons per year.
Proving it was more than just a convenient location, Nevada also demonstrated the political will to land the factory. As part of the deal to land the factory, the state would have to commit to contributing 10 percent of the factory’s cost, or $500 million. Nevada went above and beyond, with package of tax breaks and incentives worth at least $1.25 billion over the next twenty years. The Reno Gazette-Journal published a breakdown of the provisions late Thursday: a 20-year sales tax abatement and 10-year property tax abatement make up the bulk of the package. In exchange, the company must commit to investing minimum of $3.5 billion in real property in the state, which, remembering that the projected cost for the factory is $5 billion is a fairly low bar.
Meanwhile, policies in Texas and Arizona still do not allow Tesla’s vehicles to be sold directly to customers, and New Mexico and California struggled to pass a tax incentives program through the legislatures. Concerned New Mexico legislators penned a letter in April that argued against major tax incentives for Tesla, saying “we cannot afford to give up so much future tax revenue to [while] we continue to impoverish our schools and our infrastructure.” Last week the LA Times reported that California’s efforts to attract the facility had “run out of juice,” with the legislature leaving Sacramento without holding debate on the state’s incentive package, which included relaxed environmental regulations and substantial tax breaks. (For what it’s worth, Nevada’s deal has met with its own share of pushback, with critics on both the right and the left.)
Ultimately, though, this is merely the beginning for Tesla. Simon Sproule, a spokesperson for Tesla, said the company would continue evaluating sites beyond the Reno location. Partially for insurance (in case the Reno site has “unforeseen problems”) and partially because the company expects the Gigafactory will be the first of many. “Gigafactory No. 1 is not the end of it,” Sproule said. “If you expect the company to grow – which we do – ultimately, you’ll need more than one Gigafactory.”
12 Comments on "Tesla’s Gigafactory Finds a Home in Nevada"
pctech on Sun, 7th Sep 2014 3:23 pm
While Tesla automobiles are a neat piece of technology, they won’t save the driving age.
Plantagenet on Sun, 7th Sep 2014 4:12 pm
The higher taxes and tougher environmental regulations in California also helped kill any hope of locating the battery factory in that state.
Kenz300 on Sun, 7th Sep 2014 4:26 pm
Electric vehicles are the future of transportation.
E-Bike Sales Are Surging in Europe – NYTimes.com
http://www.nytimes.com/2014/08/19/business/e-bike-sales-are-surging-in-europe.html?emc=edit_th_20140819&nl=todaysheadlines&nlid=21372621
Makati1 on Sun, 7th Sep 2014 7:45 pm
Still building in the desert. Stupidity in spades…lol.
Like the multi-billion dollar whiz bang HQ for Apple. Also in a failing area.
But then, the last gasp of an empire is usually wars and building monumental buildings to their stupidity.
GregT on Sun, 7th Sep 2014 9:52 pm
With the end of the oil age, will come the end of the electric age, and the end of the industrial age. Electric vehicles require all three. They also require finite resources such as rare earth metals, which are called ‘rare’ for a reason. When someone figures out a way to grow transport from current sunlight, only then will we have found a solution.
But wait, ‘someone’ already did, better known as muscles.
Davy on Mon, 8th Sep 2014 7:34 am
I have no problem with this investment but like Greg said let us respect it for what it is and that is nothing more than another bullet in the gun of BAU survival. Humanity is facing a Mega Predicament of multiple smaller ones that are converging, reinforcing, and accelerating. BAU is vital to the existence of all our delocalized locals in a dangerous global co-dependence. The degree and duration of contraction of BAU until a reboot of stability is frankly a matter of life and death for many if not most of us. I can’t predict the degree and duration of BAU’s contraction but I can predict pain and ugly will arrive if we do not make preparation at the bottom and at the top. Growth and prosperity are out of the question and over and done with. The top will be no higher than our local communities doing something. I doubt the very top can doing anything locked in its unholy pursuit of growth and wealth through greed and corruption. Batteries along with AltE are a vital component of resilience and sustainability of BAU. I would prefer to see a smaller scale and dispersed facility in the form of small cottage industries but let’s face it we are at the peak of industrial man so the whole system is gear to big because of economies of scale and the nature of capex creation in the racket of the modern Ponzi scheme of debt and credit creation. This investment is by far more important than a new highway or Nascar track. But Kenz there is no future with something this large, energy intensive, and complex. When complexity fails this white elephants will shut for the smallest of reasons. Remember Liebig’s law of the minimum and entropic decay found in the 2nd law.
eastbay on Mon, 8th Sep 2014 9:45 am
A factory like that uses lots of water. Is there any water in that part of Nevada?
UP-S-NV on Mon, 8th Sep 2014 11:34 am
Nevada has not undone their Dealership law either. Supposedly during the upcoming special session, that is on the table for a vote.
There is water in that part of Nevada. Let’s hope this doesn’t have a negative impact on the beautiful Pyramid Lake.
Dave Thompson on Mon, 8th Sep 2014 1:12 pm
More hopium for the masses.
Speculawyer on Mon, 8th Sep 2014 11:43 pm
Oh, such doomers. If they manage to get some vertical integration going and slash 30% off the cost of batteries as they plan, this will be a big step toward making EVs more affordable to the masses.
They will still be more expensive than ICE gas cars but if gasoline prices keep going up as I suspect they will over the next few years, people will be willing to pay more upfront instead of walking.
And EV buyers become strongly incentivized to install solar PV systems to generate their own fuel.
Davy on Tue, 9th Sep 2014 6:32 am
Spec, your economic theory is very short term . They whole EV industry is dangerously energy intensive in aggregate, over complex, and dependent on far flung “just-in-time” distribution from an unstable BAU. IMA a BAU that will collapse with liquid fuel shortages. You don’t have to be a doomer to see dark clouds ahead with EV as a less than stellar performer to-date. I see no indication the EV industry can manage a breakout of its codependency with liquid fuels. Don’t get me wrong EV is a vital bridge energy vector but nothing more than short term.
ghung on Tue, 9th Sep 2014 11:09 am
Not getting into the whole sustainability of the car culture thing, I expect this is a pretty good bet for Musk, et al, since (barring a major crash) battery demand will be increasing over the next couple of decades, and not just for electric vehicles. I’m sure they’ve considered this, along with possible changes to battery technology. These batteries could be configured and sold for all sorts of applications.
I’m sure the water situation has been carefully considered. While the majority of the Reno/Carson area’s water comes down the Truckee River from Lake Tahoe into Pyramid Lake (which has no natural outlet), these water systems are highly regulated and monitored. Pyramid Lake lies within the lands of the Pyramid Lake Paiute Tribe res. Carson City also has the Carson River which is a different watershed out of the Sierras; feeds the Lake Lahontan reservoir. The Truckee Canal connects the two watersheds.
I’m sure a recycling scheme is in the plans since the Reno area only gets about 10 inches of rainfall annually. They pray for snow in the Sierras.
This ain’t your Grandaddy’s manufacturing plant.