The governor of Nevada and Tesla Motors, the electric car company with gigantic ambitions, will be “making an affirmative announcement” on Thursday about the construction of a huge battery factory, a person involved in the negotiations said on Wednesday.
Tesla has been seeking incentives worth hundreds of millions of dollars from at least one of five states, including Nevada and California, to build what it calls a “Gigafactory” to produce batteries for its electric cars and for use on the power grid.
The factory would be 10 times as large as any battery plant now operating, and is intended to achieve a cost reduction of 30 percent in the batteries — which would probably be needed to create enough demand for electric cars to justify a factory that big.
The subsidy would require action by a state legislature, but leaders of the Nevada Legislature will join in the announcement, people involved in the talks said. Its next session will begin in January.
Tesla has said it plans to build a factory for $4 billion to $5 billion, and wants 10 percent of that to come from the host state. Elon Musk, Tesla’s chief executive, has said the factory is supposed to employ 6,500 people, which would put the subsidy in the range of $75,000 per job, much more than the inducements offered by most state industrial development efforts.
In addition, state concessions often take the form of tax forgiveness for a certain number of years, a strategy in which the state risks nothing because without the tax holiday, there is nothing to tax. But Tesla is seeking upfront investment.
Neither the company nor the governor’s office would comment Wednesday on the substance of the planned announcement.
Tesla has taken the unusual step of beginning site preparation near Reno. The company has previously said that it intended to do site work at more than one place, to assure that it had a site ready for production of a new model that — with the help of the less expensive batteries — it plans to sell for $35,000, half the price of its current version. But the strategy also keeps pressure on the host state because it does not limit the company’s commitment to any one location. Arizona, New Mexico and Texas were also considered. Brook Taylor, spokesman for the California Governor’s Office of Business and Economic Development, said, in response to the impending announcement, “No other state has added more jobs than California since the recovery began, and we’ll continue to work closely with businesses, including California-based Tesla, that want to grow here.”
Lux Research said that the factory would “see more than 50 percent overcapacity,” because it would cut prices only modestly and fail to sell cars at the level anticipated, 500,000 in 2020.
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