Answers to some of the most frequently asked questions about the automaker and its so-called "gigafactory"
SPARKS, Nev.—Now that Gov. Brian Sandoval has signed into law a package of incentives for Tesla Motors, Inc. worth as much as US$1.3 billion, the electric car maker is moving ahead with plans to build a US$5-billion lithium battery factory.
Expected to open in 2017 and employ 6,500 workers, the plant will make cheaper batteries so Tesla can afford to mass market a new line of more affordable vehicles.
Here are answers to some of the most frequently asked questions about the California-based company and its so-called “gigafactory”:
When will construction begin and when can it be expected to start producing batteries?
Site preparation began in July at an industrial park along Interstate 80, about 25 kilometres east of Sparks, Nev., a Reno suburb. Pouring of concrete could begin at any time with actual construction underway by next year and continuing until 2017 when the factory is scheduled to open.
It is expected to reach full production the following year.
How big will the “gigafactory” be?
The factory itself is expected to cover as much as 10 million square feet, an area equal to 174 football fields. Tesla CEO Elon Musk said it will be the largest lithium battery factory in the world, producing more batteries annually than all the existing plants in the world did in 2013.
How many jobs will be created?
The factory is projected to employ as many as 6,500 workers by the time it is scheduled to hit full production in 2018. In the meantime, the Governor’s Office of Economic Development projects 3,000 construction jobs will be created, beginning with 700 in 2015. Another 1,000 direct jobs are forecast to be added in 2016 with an additional 3,000 by 2017. The state anticipates 22,000 jobs will be produced over 20 years as a result of the project.
Who will get the jobs?
Half of the 6,500 factory jobs and half the 3,000 construction jobs must be offered to Nevadans who have worked 30 hours a week the past year in a Nevada job covered by health insurance. The factory jobs are expected to average a minimum of $23 per hour. If Tesla cannot find enough qualified Nevada workers for specific jobs, it can appeal to the state for exceptions.
What did Tesla receive in terms of economic incentives?
The total package over 20 years is estimated to be worth US$1.3 billion. As much as US$1.1 billion of that will come in the form of tax abatements that will see Tesla pay no property or payroll taxes for 10 years and no local sales or use taxes for 20 years. The other nearly US$200 million is in the form of tax credits.
How does this compare with other incentive packages offered nationally?
The incentives are 14 times larger than the largest Nevada has ever granted—US$89 million for Apple Inc. to locate in Reno in 2012. According to Good Jobs First, it is the 13th largest giveaway in United States history, rivaling the biggest ever offered to the auto industry—the US$1.3 billion offered to the then-Chrysler Group LLC from Michigan in 2010. The biggest ever went to Boeing Co. in Washington state, with a US$8.7-billion package.
What’s the return on Nevada’s investment?
The governor projects a return of 80-to-1 based on an investment of US$1.3 billion that he says will pump US$100 billion into Nevada’s economy over 20 years, although some economists argue the multiplier used to figure indirect investment is inflated.
What assurances does Nevada have it will see all that money?
Tesla is required to invest a minimum of US$3.5 billion in the state within 10 years. If it fails to do so, it will have to pay back the abatements with interest.
Why did Tesla pick Nevada over Texas, California, New Mexico and Arizona?
Officials in Texas say they offered Tesla a bigger incentive package. Musk acknowledged Nevada’s offer wasn’t the largest, but insisted it wasn’t all about the money. He said the cost of doing business was a key and that the single most important factor was a regulatory climate that allowed Tesla to move fastest in Nevada.