Mark Rogowsky of Forbes confirms that Nevada has won the five state, namely Texas, New Mexico, Arizona, California and Nevada, showdown for Tesla Motors Inc (NASDAQ:TSLA)‘s $5 billion Gigafactory project. Rogowsky wrote that despite prolonged negotiations there was little competition for the Silver State, which according to Tesla Motors Inc (NASDAQ:TSLA)’s projections is going to add about 6,500 new jobs.
There were three crucial factors that made Nevada come out shining. Its geographical location, its politics and finally the right kind of human capital. Being located in the Tahoe-Reno Industrial Center, the new factory’s efficient transport links by road (Interstate 80 puts Tesla Motors Inc (NASDAQ:TSLA)’s factory in Fremont, Calif. at a mere five hours driving distance), and close proximity to both Union Pacific rail line and an airport, could not be ignored. Closeness to Fermont also means that executives will have to travel a shorter distance during the Gigafactory’s developmental phase, thus resulting in less burden on the company’s finances.
Moreover, since Nevada has the country’s only active lithium mine and with the Gigafactory expected to consume a whooping 15,000 tons of lithium carbonate annually (current global annual demand is 160,000 tons) it only makes sense to choose the Silver State. Rogowsky also pointed out Nevada’s abundant solar power which even outperforms Arizona’s.
Secondly, favorable politics mostly involved hindrances in other states that weren’t present in Nevada. For example, Texas and Arizona do not allow Tesla Motors Inc (NASDAQ:TSLA) to sell cars, thus turning their stores into mere “galleries”. Governor Rick Perry tried in vain to overturn this.
New Mexico couldn’t compete with Nevada’s right-to-work law whereby the employer is exempted from either paying union fees or hiring union members. California not only lacks the right-to-work law but under the State’s law, the court can also issue an injunction under some lawsuits to halt the project. With the Model 3 deadline in 2017, Tesla Motors Inc (NASDAQ:TSLA) can’t afford this kind of patience.
Last but not least, Nevada’s history of being a construction warehouse and with Apple Inc.(NASDAQ:AAPL) and Amazon.com, Inc.(NASDAQ:AMZN)‘s facilities already in the Reno area, the state offers just the right kind of human capital to accomplish the task at hand.
Rogowsky explained that it is unclear as to what Governor Brian Sandoval offered to Tesla Motors Inc (NASDAQ:TSLA), which was seeking $500 million in incentives and support. Hence, it is hard to decide how profitable this venture will be for the Silver State itself but with Tesla Motors Inc (NASDAQ:TSLA) finally on its way to building the factory, it’s certainly a win for the company.