Tesla Picks San Francisco Bay Area for Sedan Production

California nicks New Mexico for an EV plant

By Brendan Moore

06.30.2008

Tesla Motors has backed out of building their mass-market EV sedan in New Mexico, and in a surprise move, has announced that they will set up their factory in the San Francisco Bay Area. The company said it plans to be producing their $60,000 USD sedan before the end of 2010. The announcement was made by company officials standing next to a beaming Arnold Scharzenegger, governor of California, and Bill Lockyer, State Treasurer.

“We want these cutting edge companies not just to start in California and do their research and development here. We want them to build in California,” said Schwarzenegger, who toured the Tesla headquarters with Lockyer and Victoria Bradshaw, Secretary for the California Labor and Workforce Development Agency today before his announcement.

The possibility that Tesla, a California technology start-up that has gotten a lot of positive press, would build their cars in New Mexico “drove me absolutely insane,” said the governor, who is on the waiting list for a Tesla Roadster. “I wasn’t about to let the company that makes the world’s sexiest, and best high performance electric car go to another state”.

For his part, Tesla CEO Ze’ev Drori said, “We are not a mere niche player with a car to the rich and famous. We are building high-volume zero emission vehicle manufacturing in California for a midsize family sedan in California and we are not going to stop there.”

The sedan, previously called Project Whitestar internally, will be marketed as the Model S. Although the Tesla Roadstar will sell for around $109,000 and the Model S will retail for a forecast $60,000, the company is also promising an EV that will retail for less than $30,000 in less than four years from today’s date.

In what can only be characterized as an amazing coincidence, just last week the California Alternative Energy and Advanced Transportation Financing Authority, which Lockyer chairs, put into place a program exempting makers of zero-emission cars from paying sales and use taxes on equipment. The deal worked out with Tesla calls for the state to actually purchase the $100 million dollars worth of equipment for the assembly plant, and then subsequently lease it to Tesla under a lease-purchase agreement. Tesla will not have to pay sales tax on that equipment once Tesla buys it at the end of the term when they exercise the purchase option of the lease. Did you get all that?

These financial gymnastics will save Tesla about $8 million on the $100 million worth of equipment, Lockyer said. The company also is eligible for at least $1 million in training funds. Schwarzenegger also mentioned that if the company were to locate their production facility in one the areas in the region designated as California Enterprise Zones, it could see substantial additional tax breaks. Some of the cities in the Bay Area that are in those zones are Oakland, Richmond, and Watsonville.

This nice little coup for California was met with some unhappiness in New Mexico, where the state Economic Development Secretary Fred Mondragon took Tesla to task in a press conference for leaving his state at the altar, but it was fait accompli by the time the government of New Mexico found out about it. It looks like California will be home to an important mass-producer of electric vehicles.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

Share This Post On

5 Comments

  1. Ahhh-nuld saves thes the day, I guess. It would be weird if California ends up as an automobile production area as the products move over to electric vehicles. California displaces Detroit and the American South in terms of vehicle production.

  2. Tesla changes course quickly so whose to say if this will actually happen.

  3. A huge win for NorCal. I can tell you that people here are excited about getting the Tesla factory.

  4. A perfect fit – a eco-communist car made in the Communist State of California. We don’t need electric cars, we just need to drill for the oil we have, and it communists like CA that prevent America from being free.

  5. Wow, it’s so rare to actually hear from a nutcase like the one that has the comment before this one. I guess I need to get out more because I never meet people like this that have such a bizarre base of logic from which they reach their equally bizarre conclusions about the world.

Submit a Comment

Your email address will not be published.