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California Loses Tesla's Gigafactory to Nevada Because of Heavy Regulation

California Loses Tesla's Gigafactory to Nevada Because of Heavy Regulation

Tesla Motors announced they will build their new “gigafactory” for producing automotive batteries in Nevada. The deal was seen as a win for Nevada and a loss for California which was considered too slow moving by CEO Elon Musk.

The announcement was made by Tesla founder Elon Musk and Governor Sandoval on the steps of Nevada’s state Capitol building. Governor Sandoval thanked Musk for choosing to “build the world’s largest and most advanced battery factory in Nevada
which means nearly one hundred billion dollars in economic impact to the
Silver State over the next twenty years.”

“I would like to recognize the leadership of Governor Sandoval and the
Nevada Legislature for partnering with Tesla to bring the Gigafactory to
the state,” Musk said.

The massive new “gigafactory” will be the largest automotive battery factory in the world at 5 million square feet. Construction of the factory will employ 3,000 people and once complete the factory itself will provide thousands of jobs. Batteries for Tesla’s planned mid-range electric sedan are expected to be produced at the factory beginning in 2017.

While the gigafactory is a potential win for Nevada it’s clearly a loss for California. After Musk announced that one of four states–California, Nevada, New Mexico and Texas–Governor Jerry Brown sought to persuade Musk to keep the factory in the state where Tesla’s headquarters is also located.

The problem with building in California was heavy regulation and slow-moving regulators. During a conference call early this year Musk explained, “California has quite a complex and lengthy process for approval of
Greenfield sights. So what we couldn’t afford was waiting like a year or
more for kind of to proceed, which would I think also make sure no
environmental impact of any significance, but it would just take a long
time for the California Regulatory Agencies to process information that
they would need to for their obligations on the California Law. Whereas
in other states it’s much more streamlined approach.”

Musk also suggested the cost of operating the factory would be higher in California saying, “we also need to make sure that the ongoing operational costs of the Gigafactory are not significantly worse than other states.”

Nevada will be providing Tesla with a very generous tax break. The LA Times reports, “according to Nevada documents, Tesla would receive up to a 100% tax
abatement for the next 20 years for all sales tax, and up to a 100% tax
abatement for the next 10 years for all real property tax, personal
property tax and modified business tax.” Despite the tax breaks, the deal is expected to put nearly $2 billion into the state over the next 20 years.

California Republican Senator Ted Gaines expressed disappointment at the loss of the factory. He told the LA Times, “I’m devastated for the 6,500 families who won’t have the chance at these jobs unless they move to Nevada.” He also called the placement of the factory, “a clear indictment of our business climate.”

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