Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

2014 Tesla Model S P85 with a price tag of just over $124, 000 in Vancouver, British Columbia, Wednesday, May 7, 2014.

Rafal Gerszak/The Globe and Mail

On the outskirts of Reno, Nev., an inconspicuous excavation site marks the first visual sign of a project that has become the biggest economic development prize in the United States – a colossal factory designed to help the world's best-known electric car company turn the automobile industry on its head.

Earlier this year, Tesla Motors Inc. announced it is planning to build what it called a "Gigafactory" to ramp up the speed and quantity of its lithium-ion battery production. Should the company's estimates prove correct, the new production facility will essentially double the world's lithium-ion battery production in the next three years.

The project's price tag? Between $4-billion and $5-billion – a dollar amount that, given its multiplier effect, can have a staggering impact on a state's economy.

Story continues below advertisement

"When you think about the way that would be allocated in terms of the building, the equipment the employees the transportation ... anything of that magnitude defies my comprehension when you have that many zeros behind that number," said Jakki Mohr, a professor at the University of Montana's department of management and marketing.

Since Tesla's announcement, a handful of U.S. states have been caught in a feverish contest to lure the company and its massive new factory – not to mention the 6,500 jobs that come with it.

State lawmakers have in recent weeks been readying incentive packages that will likely include hundreds of millions of dollars in tax breaks, investment and possibly exemption from certain environmental regulations.

The Gigafactory is the central plank of an audacious strategy by the company to bring electric-car battery costs down by more than 30 per cent in the next three years – enough to begin selling Tesla electric vehicles at a price tag of about $35,000 (U.S), compared with today's lowest-priced model, at about $70,000.

Almost everything about the proposed factory is gargantuan in scale. Tesla estimates it will need up to 1,000 acres of land and 10 million square feet of factory space. The facility is likely to draw a huge amount of power, not only from traditional sources, but also renewable ones such as solar and wind.

The company has made clear that it expects the public to pay about 10 per cent of the factory's costs. But that contribution of roughly $500-million is just one of the many incentives the winning state will likely have to offer. Tesla has narrowed its shortlist of finalists to California, Nevada, Arizona, New Mexico and Texas. Reno, Nev., is the first location in which the company has actually begun construction, but it intends to do so in at least one or two other states before picking a winner – keeping the contenders guessing in the process.

"Before we actually go to the next stage of pouring a lot of concrete, though, we want to make sure we have things sorted out at the state level, that the incentives are there that make sense and are fair to the states and to Tesla," Elon Musk, the company's CEO, said in a call with analysts.

Story continues below advertisement

Tesla did not respond to a request for comment.

Every one of the states vying for the Gigafactory must overcome serious and unique hurdles.

California, for example, appeared as the early favourite, given that Tesla's headquarters are in Palo Alto, near Silicon Valley, as is its pipeline of skilled labour. And while relatively untapped, the area around California's Salton Sea is home to the biggest known lithium reserve in the United States.

But California has some of the highest tax rates and stiffest environmental regulations in the country, which make it a tough sell for a company that intends to produce 500,000 vehicles a year by 2020 – a number that will demand more electric-car battery production than exists in the entire world today. The state is putting together an incentives package in an attempt to lure Tesla, and the package may well include exemptions from some of those environmental rules.

Environmental regulation is far less of a concern for Tesla in Texas. However, that state currently bans direct auto sales, the means by which Tesla sells its cars.

Nevada, which appears to be the current front-runner, is particularly enticing for the company because the state has no personal or corporate income taxes. The state also has a bustling lithium industry. But Nevada's low tax rate limits the amount of money it takes in, and as a result, how much it can contribute to the project. Nonetheless, for the Reno area, trying to shake off its reputation as a poor man's Vegas, the prize is worth fighting for.

Story continues below advertisement

"Any community that has a project like this would be thrilled because, first and foremost, it brings quality jobs to the region," said Mike Kazmierski, president of the Reno-Sparks-Tahoe Economic Development Authority. "But maybe even more importantly, it brands the community as a place that is selected in a highly competitive process as one of the best places to do business by an up and coming company.

"That brand associated with Tesla would rub off on the Reno-Sparks area, and already has."

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies