Southwestern states bidding for $5 billion Tesla factory

The new battery plant could produce more batteries in one year than the industry made last year. (Reuters)

Four southwestern states are in the running to land a new multi-billion dollar factory producing batteries for electric cars, a competition that could bring more than 6,000 jobs to the winner.

Tesla, the electric car manufacturer, is evaluating sites in Arizona, Nevada, New Mexico and Texas, it said in a statement released Wednesday. The company hopes to break ground on what it calls the “Gigafactory” this year and begin production by 2017.

The factory would eventually require between 500 and 1,000 acres of space and include solar and wind farms — which is why the company is looking to the Southwest for its locations. Tesla estimates it would employ approximately 6,500 workers by 2020, when the Gigafactory would be operating at full capacity.

By the time it reaches full capacity, Tesla hopes the factory can produce more lithium ion batteries, used in the company’s high-end electric vehicles, than were produced in the entire world in 2013.

The company is looking into a 107,000 acre industrial park near Reno and Lake Tahoe, the Las Vegas Review-Journal reported, and an industrial park northwest of Las Vegas.

The new factory is likely to set off a bidding war between the four states, including rich packages of tax incentives and rebates. States are loathe to make public their pitches to corporations; a spokeswoman in Texas Gov. Rick Perry’s office refused to comment, while several other spokespeople didn’t return e-mails seeking comment.

“We’ve put together a pretty big package of incentives,” said an official in one of the competing states, who didn’t want to be identified when discussing his state’s pitch.

States routinely use things like tax breaks and incentive packages to win bidding wars seeking corporate investments. Fortune 500 companies alone have received more than 16,000 subsidies at a cost of $63 billion, according to a report published Thursday by Good Jobs First, a group that opposes corporate subsidies. At least 17 companies in the U.S. receive more than $1 billion in breaks; Boeing leads the list, receiving more than $13 billion in subsidies and incentives.

Last year, Washington State added to Boeing’s bottom line with an incentive package aimed at luring a new production line for the 777X widebody jet to the Puget Sound region. The package of tax breaks and incentives, totaling about $8.7 billion over several decades, passed the state legislature with broad bipartisan support; Gov. Jay Inslee (D) signed it into law in November.

States competing for the Tesla plant will make the case that their low-tax environment will benefit the company. But, as the Review-Journal pointed out, that good tax environment can work against states too: Nevada’s lack of income tax means it cannot offer the corporation that specific break.

Reid Wilson covers national politics and Congress for The Washington Post. He is the author of Read In, The Post’s morning tip sheet on politics.

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