Tesla Motors Inc Choosing Nevada For Gigafactory [REPORT]

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Tesla Motors Inc NASDAQ:TSLA has selected Nevada as the final decision for its gigafactory site, according to CNBC‘s sources. The media network’s source inside the Nevada governor’s office said the state is a lock for the massive facility but that the two sides are still ironing out the specifics of the contract.

Nevada wins Tesla’s gigfactory

CNBC’s source added that it might be a week before Tesla makes it official. However, The Wall Street Journal and Dow Jones report that Nevada is planning to give a press conference tomorrow in Carson City to make the announcement. Also local news station KSNV-TV is reporting that Nevada Gov. Brian Sandoval is speaking with state lawmakers about setting a special session so that they can approve the package of financial incentives for the electric vehicle maker.

Last month, Tesla Motors had said it had broken ground on a site outside of Reno, Nev. in Storey County but also said it would continue looking at other sites in the states that were competing to get the gigafactory. At this point, it’s unclear whether the site near Reno will be the location of the plant.

Will Tesla meet its goals?

Earlier today, a report from Forbes suggests that Tesla may be biting off more than it can chew with the gigafactory. The report pointed to research from Lux Research, which indicates that Tesla’s planned factory might create significantly more lithium-ion battery packs than the automaker can sell. In fact, the report suggests that Tesla will only be able to sell less than half of what it currently is planning to produce at the gigafactory.

Tesla Motors plans to start production inside the facility in 2017 and after three years, the automaker wants to produce half a million battery packs a year. Lux Research expects Tesla to sell only 240,000 Model 3 cars in 2020, however, meaning that the firm believes Tesla is greatly overestimating the number of cars it will be able to sell going forward. Lux estimates that Tesla may be planning 57% more capacity than it will really need.

Are the bulls or the bears right on Tesla?

Of course this firm’s projections are just as good as those put together by one of the great Tesla bulls. It’s all pure speculation based on how much demand analysts think there will be for the luxury automaker’s electric vehicles. Two of the vehicles Tesla plans to be selling in addition to the Model S aren’t even in production yet, so realistically, this could go either way.

If Lux is right, however, the state that ends up getting Tesla’s gigafactory might not see as great a return on their investment as they hope. The automaker asked for $500 million worth of incentives from the states that were competing to get its gigiafactory. Tesla Motors expects to create 6,500 jobs in the next six years, but if the demand isn’t there, that could spell trouble for the state that gets the gigafactory—but only if the bears are right on this one.

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