In February, Tesla Motors Inc’s (NASDAQ:TSLA) CEO Elon Musk announced a $5 billion “gigafactory” which would be a battery manufacturing unit that can produce batteries for 500,000 cars. The new company would create 6500 jobs.
Car manufacturers have been facing battery shortage for years. Batteries are needed by the car manufacturers to power hybrid cars as well as electric vehicles. Toyota Prius’ production was interrupted by the 2011 Japanese earthquake which came just as the latest version was launching.
Tesla’s car line up, which currently has model S sedan will in coming years include model X an SUV and a mass electric car. Currently Tesla’s cars are built in Fremont, California but the plant does not have the capacity to meet Tesla’s future needs which is why the gigafactory is being built.
Panasonic is Tesla’s partner in its battery production for the gigafactory. Panasonic will invest billions of dollars into the project. Nevada could be one of four states that could house the gigafactory. The place outside Reno has plenty of open space and has proximity to California.
Arizona will have an Apple Inc. (NASDAQ:AAPL) plant and on the back of the Apple plant is making the case for the gigafactory. Arizona has advantages like Phoenix Sky Harbour Airport and easy access to California. However, Arizona does not allow direct sales to customers as would be liked by Tesla.
New Mexico, which does not have much to speak of in manufacturing has a long shot for the gigafactory. It is placed well for the shipping of the batteries by rail and has lot of land available.
Texas’ governor Rick Perry is in negotiation with Tesla. Many companies like Toyota are moving into the state due to conditions favourable for business. Tesla also has a direct to customer sale policy which created tussle with car dealers.