Electric car manufacturer Tesla is going to build a massive 10-million-square foot battery producing Gigafactory and create 6500 jobs – but not in California. The company headquartered in Palo Alto has narrowed its choice for the factory to four states: Nevada, Texas, New Mexico and Arizona.
Another blow to California’s business reputation?
When you consider that the state has been generous to Tesla with tax breaks a subsidy program, and regulatory requirements that allows Tesla to turn a profit not by selling cars but by selling pollution credits, you would hope that a big job creation project would stay at home.
Last year, Tesla turned a $57 million loss into an $11 million gain by selling $68 million worth of these credits to other auto manufacturers in California.
When Tesla posted the Journal editorial on its own website, one writer responded to the newspaper’s complaint about the $2500 subsidy offered by California to purchase the car: “Give me a break. It’s only $2500 I don’t think that makes a difference for people who buy a $100000 car.”
But as another writer replied, “It’s not that most Model S owners don’t need the rebate, ’cause that’s really obvious. It’s that California’s paying it anyway, and has exhausted the funds allocated to do so.”
California should be more concerned with getting those 6500 manufacturing jobs for the people who need the jobs than worry about the rich getting a subsidy for a car purchase.
But for all the state’s generosity to the home-based industry, Tesla is looking elsewhere for its new plant.
In an article in the Reno Post-Gazette on Nevada’s effort to get the factory, Dennis Donovan, a principal at New Jersey-based site selection firm Wadley Donovan Gutshaw Consulting listed what Tesla would be looking for in its search for a factory site. “These include utility infrastructure, availability of land, ease of acquiring environmental permits, a good supply of semi-skilled labor and the presence of community colleges that can train technicians.”
California seems to meet most of the requirement in abundance – with the exception of the ease of acquiring environmental permits. Ironic, if the permitting is the hurdle that convinced Tesla to look elsewhere since this is a car company that lives on its reputation as an environmentally friendly product and survives because of its ability to sell pollution credits.
Why is Tesla looking outside California? As Dorothy Rothrock of the California Manufacturing and Technology Association wrote in the association’s blog: “Of course, we can’t expect every manufacturer to pick California for the next investments, but we should expect our fair share. California offers abundant resources, skilled workers, access to markets and other benefits. We urge state leaders to determine if Tesla would have expanded here if not for a reason that we should fix. This is a teachable moment – let’s make appropriate changes and increase the odds that the next big decision by a California manufacturer will be in our favor.”
State officials who hail the Tesla car as the future of transportation and go out of their way to help make Tesla successful should be pushing harder to acquire the jobs the new manufacturing plant would bring.