Tesla Gigafactory – Backstory On How Nevada Got The Gig (w/video)

NOV 19 2014 BY JAY COLE 33

Go behind the scenes to find out how Nevada and Tesla came to an agreement on the company’s first Gigafactory.

Fortune Gets The "Inside Scoop" On How Tesla Chose Nevada For Its Gigafactory

Fortune Gets The “Inside Scoop” On How Tesla Chose Nevada For Its Gigafactory

As the Fortune-produced video (above) and great companion article describes, it took about a year to get the deal done, and one of the greatest selling points of the deal was that there was “zero scheduling risk” in Nevada.

Lance Gilman from the Tahoe Reno Industrial Center says that the only place in the world potentially more accommodating to Tesla would be in China…and that wasn’t too like to happen with American-born Tesla.

Besides the video primer, check out Fortune’s in depth piece on the process here.

 

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33 Comments on "Tesla Gigafactory – Backstory On How Nevada Got The Gig (w/video)"

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This is a fantastic article.

“Then Musk talked to Sandoval about two weeks later, and the deal was suddenly off. Musk had changed his demands. He now wanted a staggering $500 million in cash upfront instead of some of the tax abatements.”

The balls on that guy. Wow.

Luckily every state turned him down. Nevada did end up giving Tesla transferable tax credits they could sell to other companies to reduce their tax bill.

Mikael

The only question here is how much evil can you do in the name of good. The balance between superhero and supervillain is treading thin at times…

Boris

Nothing is ever black or white, Mikael, when will you understand that 🙂 it’s only shades of grey….

Dr. Kenneth Noisewater

What’s so evil about driving a hard bargain? Elon plays hardball, and so does the state. As long as neither brings violence or its threat to bear, and the negotiation is that of consenting entities, what’s the problem?

The problem simply is, bilking hundreds of millions of dollars can also kill many hundreds and thousands of people indirectly. It is no less violent than a gun shot. Imagine, what life saving things money can do:
– feed the hungry
– medicine and treatment for the poor and sick
– shelter for the needy.

At this time, it is very unclear if there ever will be 6500 jobs created by this Gigafactory. Tesla is having hard time selling the 3000 inventory cars it is sitting on.

Big Solar

Great job FUD boy, keep the BS comin!

Sorry pal, these news are all over the internet now. Seems you ran out of defense.

Rick Danger

Hey, FUD boy, have your parents disowned you yet? I think it would be the smart move for them.

Mint

Nevada didn’t spend *any* money on Tesla.

Of the $1.4B:
-$726M is phantom sales tax revenue from equipment purchases that don’t happen w/o Tesla
-$349M is phantom property tax revenue which doesn’t get paid w/o Tesla occupying this space nobody else wants
-$29M is for phantom payroll tax revenue on jobs that wouldn’t exist w/o Tesla
-$195M is from an existing pool of tax credits they would’ve given to filmmakers instead
-$113M is for roads, which is the state’s obligation anyway

How’s that for substance? This is a huge win for Nevada at next to zero cost. It’s new primary economic activity with almost zero substitutive effect. It’s better publicity than they can buy in “come to Nevada” ads. They weren’t going to win without these incentives.

Steve Townsend

Yeah, what a bunch of c r a p.

Someone out there

Where can I find these 3000 cars Tesla are unable to sell? If the price is right I might just be in the market for one.

Contact your local Tesla dealer. Remember, Tesla ain’t stupid. They will release these little by little. Whene you call, they will ask what you are looking for, and tell you there are a couple that matches what you want, or they will get it from the other dealer. If you call 10 times with 10 names and 10 different specs, you will see that there are couple of cars for every spec.

Right now, 2% discount per month. Who knows? Post Xmas, could be 4%. Strange I didn’t see any insideevs article on these. Usually, they run 1 month old story on Tesla installing a supercharger.

Don’t forget to tell them that I sent you. I get the referral amount.

Barry Goldwater

Uh… you know there isn’t such a thing as a Tesla dealer? Your statement brings everything you said into question, such as “do you know the state of Michigan has fought them in court for months because of their “non-dealership” approach”. I work for a dealership group (location undisclosed) and they won’t allow Tesla into their car shows for this very reason. Trolllllllllll!!!!!

Someone out there

So your theory is that Tesla has 3000 cars they desperately want to sell but they are making no effort at all to sell them? It doesn’t make any sense at all.

What do you mean by making no effort to sell them? Read the article “Tesla Model S Showroom Discounts Doubled On Outdated Loaner Cars” on greencarreports.com .

I won’t call the cheap lease deals, the happiness guarantees and newspaper ads ‘making no effort’.

David Stone

That is what a large portion over the absurdly large and wasteful military budget should go.

Investing in the future and jobs is the best way to fight poverty.

That is a great read. Thanks for passing it along Jay.

ffbj

Low Risk! Perhaps, but not no risk:

Jouni Valkonen

That is why Earth life must become multiplanetary as soon as possible and no matter what is the cost. We must hedge our bets against very low probability, but very high impact risks.

Anderlan

Heh. Right now catastrophic impacts of climate change are high probability by the second half of the century. While most likely not directly able to do much worse than halve the population, the knock on effects (chaos and war) increase the chances of other catastrophes (a nuclear volley, for starters).

Jouni Valkonen

The point is that we should establish a self-sustaining colony on Mars where it is cheaper to grow food crops because politics does not hamper. With vertical farming it is possible to feed the entire population of Earth using the land area of Connecticut.

Today we are not short on food, but we fail in politics how to distribute the food for those who needs it. Today we have more than enough food production capacity to feed 10 billion people, but instead giving food for everybody, we waste our surplus production of food. Also rats and other pests are eating the amount of food that could feed about billion people.

Therefore only way that we get short on food is that we fail in politics miserably. But in 2040’s all westerners have the same living standard as Norwegians have today, and norwegians spend on averega less than 1 % of their income on food. They could easily spend ten times as much and still eat too much!

Jouni Valkonen

The investment of 200 000 dollars per job, by the state of Nevada may seem large unless you do not think that that the value of single direct job for the State of Nevada is about 800 000 dollars. And may be even larger.

Therefore this is rather good deal for Nevada, because most of the incentives are directly tied into production and jobs creation. Therefore this is also very low risk investment for Nevada.

This is also good reminder that only the manufacturing jobs are creating real economic growth into economy. Other jobs with minor exceptions are just redistributing existing wealth. Therefore it makes very much sense for the local economy to subsidize manufacturing.

Jouni Valkonen

And I forgot to state the obvious that Article was splendid with lots of details, although I disagreed in some parts with the journalist when he was presenting his own opinions on politics or economics.

“Therefore this is rather good deal for Nevada, because most of the incentives are directly tied into production and jobs creation. Therefore this is also very low risk investment for Nevada.”

As a resident of the state of Nevada this is what made the deal slightly more appealing. I didn’t like the 1.4B amount, which will have to be made up over the next 20 years to pay for all these services the Tesla factory is going to need [1]. But if we don’t end up having to deal with the abatements if Tesla falls behind then at least we’re covering our own asses instead of handing them to Tesla.

[1] Southern Nevada get shafted on everything, this upcoming budget year the South (Las Vegas) is going to put in 70-75% of the state road taxes but only get about 55-60% of the pot – we’re losing 1/3rd or so of the gas tax funds we send up north to Carson City, we’re losing that money to the rest of the state.

QCO

Interesting comment about the “unhelpful” letter from the Texas auto dealers association (TADA).

It denifnately makes no sense to put a massive factory investment in a state that openly refuses to allow you to sell your product, even though San Antonio had the highest value bid.

Ultimately Nevada had intrinsic advantages because of proximity, but Texas could have bought it if they had worked more as a team.

Unfortunately with the carrot gone, the State will not be able to resist TADA demands to keep the franchise law in place, so no Tesla direct sales in Texas for a long, long time.

Chris B.

Do “direct sales” in Texas even matter? I have done two seperate test drives at either Tesla events or the Tesla service center here in Dallas. Tesla also has a Tesla store at teh local mall, and models to drive. You can still order a car. No Tesla “dealer” has “inventory sitting on the lot” so everyone has to order. Heck, even at the Tesla event this weekend, the Tesla guys basically acknowledged it “doesn’t matter”.

QCO

The workarounds are ok for the current enthusiasts, but not viable for the future, including when Tesla hits high volumes with Model 3.

Tesla cannot touch or deliver the car, and if the Tesla staff say certain things to you, they would be in violation of the law and you can be sure TADA will try to go after them.

All very silly and petty, but TADA sees it as a challenge to their way of life. Don’t underestimate them, they own half the politicians in Austin.

ModernMarvelFan

Tesla is very good at “negotiating”. Elon manages to find good deals after good deals.

Then again, without it, Tesla wouldn’t be able to be so successful. Those “smart deals” keeps Tesla alive.

jmac

The real reason Tesla chose Nevada is simple….

The “Mustang Ranch”, located halfway between the Giga-factory and Reno.

Mama didn’t raise no silicone valley dummies.

Kickincanada

That’s about the dumbest comment I’ve ever read on this forum

Barry Goldwater

So this is how rumors get started?

“Are they making electric Mustangs now?!?”

ffbj

The Mustang Ranch is an infamous house, of ill repute, a bawdy house,a house of ill fame.