Tesla’s battery plant site near Reno, Nev. attracted news crews when at least 100 workers walked off the job to protest the use of workers from other states, a union official told Bloomberg. Last month in a letter, the EV firm informed shareholders that it has begun producing energy storage devices, including the Powerwall for homes, at the plant.

Tesla Motors Inc Gigafactory Workers Walk Out In Protest

Dispute over hiring out-of-state laborers

According to Todd Koch, President of the Building and Construction Trades Council of Northern Nevada, local labor leaders are upset that Tesla’s contractor, Brycon Corp., is bringing in lower paid, out-of-state laborers from Arizona and Mexico.

In an interview with Bloomberg, Koch said, “It’s a slap in the face to Nevada workers to walk through the parking lot at the job site and see all these license plates from Arizona and New Mexico.”

The people who walked out were among hundreds who work on the site, Koch said.

In a statement issued to Bloomberg, Tesla said that the non-union contractor involved in the dispute, whose identity couldn’t be established by name, is using more than 50% Nevada workers and that more than 75% of the factory workforce is residents of the state.

“Today’s activity stems from the local Carpenters Union protesting against one of the third-party construction contractors that Tesla is using.” The EV firm said. “Their issue is not with how Tesla treats its workers.”

Gigafactory important for Tesla’s plans

In September 2014, Tesla CEO Elon Musk and Nevada Gov. Brian Sandoval announced a deal that included about $1.25 billion in tax breaks over 20 years on the condition that half of the so-called Gigafactory’s expected 6,500 permanent positions will go to Nevada residents. This so-called Gigafactory is very important in the automaker’s plan to curb battery costs and manufacture a cheaper all-electric car. The factory is expected to produce 50 gigawatt hours of batteries per year.

Koch told Fortune that he is not sure if the protest is going to continue at the site.

“We’re considering our options. But I can say, this is just the opening salvo and we’re not going to give up. Tesla hasn’t heard the last from us.”

The construction work at the $5 billion, 10 million square-foot factory has been progressing ahead of schedule, but if this one-day walk-off is just the first of many, then this protest can significantly impact Tesla’s progress on the factory.