Tesla gigafactory: Two officials confirm Nevada will get the plant

According to news reports, Tesla Motors Inc. has selected Nevada for the site of its planned $5 billion “gigafactory." Tesla last month confirmed that it had broken ground in Reno. less Sunset lights downtown Reno, Nevada with the Sierra Nevada in the background. According to news reports, Tesla Motors Inc. has selected Nevada for the site of its planned $5 billion “gigafactory." Tesla ... more Sunset lights downtown Reno, Nevada with the Sierra Nevada in the background. Photo: Jerry Lara, San Antonio Express-News Photo: Jerry Lara, San Antonio Express-News Image 1 of / 36 Caption Close Tesla gigafactory: Two officials confirm Nevada will get the plant 1 / 36 Back to Gallery

SAN ANTONIO — Tesla Motors Inc. has selected Nevada as the site for its planned $5 billion “gigafactory,” an economic development prize expected to generate 6,500 jobs, two local officials confirmed Wednesday.

That could mean Texas, California, Arizona and New Mexico — also competitors for the lithium-ion battery factory — are out of the running.

However, a person familiar with the company's plans told the Associated Press that a second site still would be prepared, in case Nevada is not able to deliver the incentives it has promised — or possibly to build a second factory.

Four months ago, experts and people involved with the site selection had said San Antonio and Reno, Nevada, were the strongest contenders for the project.

Co-founder and CEO Elon Musk and others from Tesla will attend a news conference about the gigafactory with Nevada Gov. Brian Sandoval, Tesla spokesman Simon Sproule told Bloomberg News. The event is set for 3 p.m. today in Carson City.

He declined to elaborate on what will be announced.

Sandoval's office told the Associated Press only that the governor will make a “major economic development announcement.”

Tesla said in late July that it had begun initial work on a potential site near Reno.

Tesla's site selection process at times left San Antonio economic development officials in the dark about the direction the automaker was heading.

While most companies carry out their site searches in secret, Tesla essentially announced its short list of states — all in the Southwest — in late February.

County Judge Nelson Wolff said Wednesday he wouldn't be surprised if Reno won out given its four-hour proximity to Silver Peak, Nevada, home of North America's only commercially active lithium mine.

“It really gives them a big advantage, because if you have to ship it, you have to ship it by rail, and that's a hazardous product,” Wolff said. “We always kind of thought that gave them an edge by being right next to the lithium mine.”

Wolff said he understood Tesla was going to wait until December to make a final decision.

“That's the last thing we've heard over here, anyway,” he said.

Mario Hernandez, president of the San Antonio Economic Development Foundation, said a nondisclosure agreement prevented him from commenting about Tesla.

In February, though, he confirmed Tesla had submitted an inquiry to the state and that the company wanted to go through state-level entities.

A spokeswoman for Gov. Rick Perry on Wednesday directed questions to Tesla officials.

San Antonio-area officials had offered economic incentives valued at $800 million, two people familiar with the package told the San Antonio Express-News in May.

In a July 31 call with Wall Street analysts, Musk estimated Tesla would fund about 40 percent to 50 percent of the gigafactory's total $5 billion price tag. Panasonic, which had signed an agreement as a lithium-ion cell supplier for Tesla, would chip in about 30 percent to 40 percent.

As for the state Tesla selects, he expected an investment of up to 10 percent, or $400 million to $500 million.

Despite Texas' ability to deliver on incentives, a state law that prohibits automakers from selling their vehicles directly to consumers may have worked against its bid. Manufacturers must sell through franchised auto dealers.

Tesla sells directly to consumers under its business model. Musk failed last year to persuade Texas lawmakers to change the rules.

Tesla needs the factory to make cheaper batteries for its Model 3, a mass-market electric car the company hopes to sell by 2017 for about $35,000. Musk has estimated the gigafactory could slash the cost of lithium-ion batteries, which are the most expensive component of electric vehicles, by more than 30 percent.

It currently sells the Model S, which starts at about $70,000.

“This is a critical step in Elon Musk's long-term goal of creating a viable, high-volume electric car,” Kelly Blue Book senior analyst Karl Brauer said in an email. “The battery pack makes up a sizable portion of any electric car's total price, but if Tesla can reduce the cost of this component with its own factory it has a real shot at producing a $30,000 electric car with a 200-plus-mile range.”

In Reno's favor are its proximity to Tesla's assembly plant in Fremont, California, and its sunny climate — “supporting Musk's desire to incorporate solar energy into the plant's manufacturing process,” Brauer added.

Within weeks of announcing the project, Musk said California — where Tesla and two other Musk-related companies, SpaceX and SolarCity, are headquartered — wasn't in the running, partly out of concern that the state's regulators would knock construction of the plant off schedule.

By June, with Gov. Jerry Brown's office in talks with Tesla and state lawmakers talking incentives, California joined the list of contenders.

Also, instead of announcing a finalist for the project, Musk said the company would select multiple sites for ground-breakings in case work at one location ran into obstacles.

Local officials and site-selection experts had considered San Antonio strong competition for the gigafactory, which is expected to take up 10 million square feet of space on at least 500 acres. The city's main selling point was city-owned CPS Energy.

The utility could offer deep discounts on Tesla's electricity rates and meet the manufacturer's wind and solar energy requirements for the facility. CPS also could partner with the company to test the renewable energy storage units that Tesla said the gigafactory would produce.

Then-Mayor Julián Castro pushed hard for the project behind the scenes, according to several sources familiar with the recruitment effort. On March 26, two Tesla executives met in secret with Castro, Wolff and CPS chief executive Doyle Beneby at City Hall.

But local officials heard little from the company in late spring and early summer.

gjefferson@express-news.net The Associated Press contributed to this report.

Tesla Motors Inc. has selected Nevada as the site for its planned $5 billion “gigafactory,” an economic development prize expected to generate 6,500 jobs, two local officials confirmed Wednesday.

That could mean Texas, California, Arizona and New Mexico — also competitors for the lithium-ion battery factory — are out of the running.

However, a person familiar with the company's plans told the Associated Press that a second site still would be prepared, in case Nevada is not able to deliver the incentives it has promised — or possibly to build a second factory.

Four months ago, experts and people involved with the site selection had said San Antonio and Reno, Nevada, were the strongest contenders for the project.

Co-founder and CEO Elon Musk and others from Tesla will attend a news conference about the gigafactory with Nevada Gov. Brian Sandoval, Tesla spokesman Simon Sproule told Bloomberg News. The event is set for 3 p.m. today in Carson City.

He declined to elaborate on what will be announced.

Sandoval's office told the Associated Press only that the governor will make a “major economic development announcement.”

Tesla said in late July that it had begun initial work on a potential site near Reno.

Tesla's site selection process at times left San Antonio economic development officials in the dark about the direction the automaker was heading.

While most companies carry out their site searches in secret, Tesla essentially announced its short list of states — all in the Southwest — in late February.

County Judge Nelson Wolff said Wednesday he wouldn't be surprised if Reno won out given its four-hour proximity to Silver Peak, Nevada, home of North America's only commercially active lithium mine.

“It really gives them a big advantage, because if you have to ship it, you have to ship it by rail, and that's a hazardous product,” Wolff said. “We always kind of thought that gave them an edge by being right next to the lithium mine.”

Wolff said he understood Tesla was going to wait until December to make a final decision.

“That's the last thing we've heard over here, anyway,” he said.

Mario Hernandez, president of the San Antonio Economic Development Foundation, said a nondisclosure agreement prevented him from commenting about Tesla.

In February, though, he confirmed Tesla had submitted an inquiry to the state and that the company wanted to go through state-level entities.

A spokeswoman for Gov. Rick Perry on Wednesday directed questions to Tesla officials.

San Antonio-area officials had offered economic incentives valued at $800 million, two people familiar with the package told the San Antonio Express-News in May.

In a July 31 call with Wall Street analysts, Musk estimated Tesla would fund about 40 percent to 50 percent of the gigafactory's total $5 billion price tag. Panasonic, which had signed an agreement as a lithium-ion cell supplier for Tesla, would chip in about 30 percent to 40 percent.

As for the state Tesla selects, he expected an investment of up to 10 percent, or $400 million to $500 million.

Despite Texas' ability to deliver on incentives, a state law that prohibits automakers from selling their vehicles directly to consumers may have worked against its bid. Manufacturers must sell through franchised auto dealers.

Tesla sells directly to consumers under its business model. Musk failed last year to persuade Texas lawmakers to change the rules.

Tesla needs the factory to make cheaper batteries for its Model 3, a mass-market electric car the company hopes to sell by 2017 for about $35,000. Musk has estimated the gigafactory could slash the cost of lithium-ion batteries, which are the most expensive component of electric vehicles, by more than 30 percent.

It currently sells the Model S, which starts at about $70,000.

“This is a critical step in Elon Musk's long-term goal of creating a viable, high-volume electric car,” Kelly Blue Book senior analyst Karl Brauer said in an email. “The battery pack makes up a sizable portion of any electric car's total price, but if Tesla can reduce the cost of this component with its own factory it has a real shot at producing a $30,000 electric car with a 200-plus-mile range.”

In Reno's favor are its proximity to Tesla's assembly plant in Fremont, California, and its sunny climate — “supporting Musk's desire to incorporate solar energy into the plant's manufacturing process,” Brauer added.

Within weeks of announcing the project, Musk said California — where Tesla and two other Musk-related companies, SpaceX and SolarCity, are headquartered — wasn't in the running, partly out of concern that the state's regulators would knock construction of the plant off schedule.

By June, with Gov. Jerry Brown's office in talks with Tesla and state lawmakers talking incentives, California joined the list of contenders.

Also, instead of announcing a finalist for the project, Musk said the company would select multiple sites for ground-breakings in case work at one location ran into obstacles.

Local officials and site-selection experts had considered San Antonio strong competition for the gigafactory, which is expected to take up 10 million square feet of space on at least 500 acres. The city's main selling point was city-owned CPS Energy.

The utility could offer deep discounts on Tesla's electricity rates and meet the manufacturer's wind and solar energy requirements for the facility. CPS also could partner with the company to test the renewable energy storage units that Tesla said the gigafactory would produce.

Then-Mayor Julián Castro pushed hard for the project behind the scenes, according to several sources familiar with the recruitment effort. On March 26, two Tesla executives met in secret with Castro, Wolff and CPS chief executive Doyle Beneby at City Hall.

But local officials heard little from the company in late spring and early summer.