Why Tesla Should Build Its $5bn ‘Gigafactory’ In Texas

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In Late February, Tesla Motors Inc (NASDAQ:TSLA), the Palo Alto, Calif., company outlined plans for a factory that would employ up to 6,500 people and cover as many as 1,000 acres, including solar and wind farms to supply its power needs. It is evaluating sites in Nevada, New Mexico, Arizona and Texas, Tesla said in a regulatory filing. While California may be home to Tesla, it is not being considered as a possible location for the “Gigafactory.”

The letter

With that many jobs on the line, State Representative Jason Villalba made his case to Tesla Motors Inc (NASDAQ:TSLA) founder and CEO Elon Musk today. While Musk is looking for the site to be powered by renewable energy many believe the size and proposed output of the Tesla factory would require an enormous amount of electricity and natural gas to operate it from the moment it opens. Texas has both.

In the letter following Rep. Villalba’s pleasantries and a reminder that the two had not only met but that Villalba backed Tesla in its fight to sell its cars directly to consumers with his support of House Bill 3351, the representative outlined a number of reasons that Tesla Motors Inc (NASDAQ:TSLA) should think Texas when the time comes to choose a location for its factory.

Bullet points are summarized from the letter:

  • Texas has no personal or corporate state income tax
  • According to Forbes, Texas is the best state to grow and run a business due to low regulations and minimal government interference
  • Texas is a right-to-work state with an intelligent and educated workforce
  • Texas has one of the most equitable civil justice systems in the nation (we won’t let people sue you frivolously)
  • Texas is perfect for expansion into Mexico and Canada while providing a distribution network for domestic sales

“Don’t Mess With Tesla”

The letter closes with some extra brown-nosing and Rep. Villalba’s offer to lead a contingent of lawmakers to Palo Alto to sit down with Mr. Musk.

While that’s all well and good. It might take an act of Congress for Musk to consider Texas following the showdowns he has had there. Or perhaps it’s best to listen to Diarmuid O’Connell, Tesla Motors Inc (NASDAQ:TSLA)’s vice president of business development, who told Bloomberg earlier this month, “The issue of where we do business is in some ways inextricably linked to where we sell our cars. If Texas wants to reconsider its position on Tesla selling directly in Texas, it certainly couldn’t hurt.”

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