Tesla Expected to Pick Reno for $5 Bil Gigafactory

Announcement planned for Wednesday evening.

by on Sep.04, 2014

A rendering of the likely layout of Tesla's planned Gigafactory battery plant.

Reno, Nevada has long been known as a gambling mecca, and it appears that Tesla Motors will be placing a $4 billion to $5 billion bet on the community which has apparently won a bidding war for the electric vehicle maker’s new Gigafactory.

Set to go into production by 2017, the 10 million square foot factory is expected to become the largest lithium-ion plant of its kind in the world, producing about 500,000 batteries annually and employing as many as 6,500 workers.

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After announcing plans for the plant – which it will erect as part of a joint venture with battery partner Panasonic – Tesla found itself besieged by bids from states hoping to win the venture. Nevada was quickly considered one of the likely candidates, along with Texas, California, New Mexico and Arizona.

While the battery-car company declined to announce its decision, “We can confirm that the Governor of Nevada has invited the media to an announcement (Wednesday),” Tesla spokesman Simon Sproule told TheDetroitBureau.com, adding that “We can confirm that…we look forward to joining the Governor and members of the legislature” during a 7 PM news conference.

There had been growing signs that Nevada was leading the chase in recent weeks, notably after Tesla began working on a site in the community. But the maker had attempted to keep the guessing game going by insisting it might actually do preliminary site preparations in two different states. In fact, Tesla founder and CEO Elon Musk has suggested the company might eventually need two battery plants.

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For the moment, even one would seem an ambitious reach considering the modest sales of battery-based vehicles. Tesla is now one of the segment’s sales leaders but is still producing less than 5,000 vehicles a month. It hopes to boost demand when it launches a second product line, the Model X SUV, next year. And it hopes to energize a more mainstream segment when it brings the Model 3 out a couple years later – at a price of around $30,000, or less than a third of a fully loaded version of the current Tesla Model S battery sedan.

Precisely why Tesla chose Nevada is unclear at this point, though the state apparently offered a number of financial incentives to get the project, which is expected to cover from 5,000 to 10,000 acres. It is also located a few hours’ drive from Tesla’s Silicon Valley headquarters and its big assembly plant in Fremont, California.

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The Golden State had been hoping to win the deal but appeared to have short-circuited its pitch when its legislature adjourned without acting upon a proposed incentive package that might have garnered Tesla’s favor. Nevada also needs to approve an incentive package reported to be worth $400 million, but Gov. Brian Sandoval is planning to call lawmakers back into session to vote on the proposal next week.

That could explain why Tesla said late Tuesday it is “continuing to work” with Nevada on its bid.

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Over the last five years, lithium-ion battery prices have tumbled from about $1,000 per kilowatt-hour to somewhere above $400, according to industry watchers. But even then, the 84 kWh pack in the Model S is a significant price burden for both Tesla and its customers. Industry analysts, such as the Boston Consulting Group, have suggested prices need to again drop by at least half to become more competitive with conventional gas power.

Tesla not only hopes to drive down prices with its Gigafactory but also increase so-called energy density, which would translate into longer range from lighter, smaller batteries. Along with price, range is considered one of the biggest obstacles to winning wider acceptance for electric vehicles.

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2 Responses to “Tesla Expected to Pick Reno for $5 Bil Gigafactory”

  1. Mike says:

    Reno’s a nice limo ride from Lake Tahoe, for those who will be in charge, and for the rest, it’s already as full of saloons as Hamtramck in the days of Dodge Main.

  2. preuser says:

    Then it’s settled obviously Nevada went the furthest above the baseline extortion terms

    Elon Musk demanded of the contestants !

    Elon Musk is also conveniently the Chairman of Solar City in addition to his position as

    Chairman and CEO at Tesla electric automobiles.

    New PHEV and BEV vehicles coming on line soon will challenge Tesla’s move into mainstream

    product . Ford Motor makes advanced PHEV and BEV traction batteries in house .

    Ford Motor Co with their unique position of making their own in house BEV and PHEV

    traction batteries and vehicles on modified existing global platforms putsplatforms puts

    them in a unique position to challenge Toyota ,GM and Tesla BEV and PHEV
    product lines at lower unit prod. cost .

    Tesla is partnering with Panasonic for their BEV batteries .GM PHEV
    and BEV batteries are from L.G. chemical Toyota ended it’s powertrain research
    partnership with Tesla. They use Panasonic BEVand HEVC traction batteries .

    Ford could be the awakening 800 lb gorilla in mainstream BEV and PHEV

    Ford has sold 53,014 electrified vehicles in the U.S. this year through
    July Tesla’s U.S. sales may have totaled 10,401 vehicles in the first
    seven months of this year, according to an estimate by Autodata Corp.