It’s good to have a backup plan. For the enthusiastic electric automaker planning to build the largest lithium-ion manufacturing and reprocessing facility the world has ever seen, it’s a maxim being strictly adhered to.
Which is why Tesla Motors [NASDAQ:TSLA] is moving its four-state search for the perfect site of its $5 billion Gigafactory to the next stage by picking not one, but multiple sites to develop. What’s more, Tesla will continue developing each site up to and including the groundbreaking which occurs immediately prior to the start of construction.
That’s according to Tesla CEO Elon Musk, who told Bloomberg earlier this week that the unusual development strategy was to minimise delays and ensure Tesla’s epic lithium-ion battery facility was producing battery packs on schedule for the production of Tesla’s upcoming models.
“What we’re going to do is move forward with more than one state, at least two, all the way to breaking ground, just in case there’s last-minute issues,” Musk said. “The number one thing is we want to minimize the risk timing for the Gigafactory to get up and running.”
For the past few months, Tesla has been closely examining a list of potential candidate sites located in Nevada, Arizona, New Mexico and Texas. Chosen for their large amount of free land — not to mention the copious amounts of sunlight Tesla wants to harvest in order to power the Gigafactory from renewable energy — each state has been engaged in a slow dance with Tesla to encourage it to choose one of their cities to locate the Gigafactory.
But the process of negotiations hasn’t been an easy one. Both Arizona and Texas currently prohibit Tesla from selling its cars directly to customers there thanks to pro auto-dealer laws passed in each state mandating that all new cars be sold through licensed third party, independent dealerships. Worse still, an attempt in the Arizona senate to pass a bill rescinding its previous anti-Tesla law died on the floor of the last session, killed by pro-auto dealer senators determined not to let the bill pass before the end of the session.
Interestingly too, Musk says California — where the Model S is currently made at Tesla’s Fremont facility in the south-eastern part of the San Francisco Bay — didn’t make the shortlist as a state where the Gigafactory could be sited because of red-tape.
“California has a lot of regulatory agencies, and although this will be a very green factory, we can’t have a situation where an enormous amount of data has to be processed by a regulatory agency to find no significant impact and then give us approval to proceed,” he said. Essentially then, California’s own tough environmental policy and the length of the bureaucratic process required to get permission to build the Gigafactory in Tesla’s back yard was just too much of a disincentive to Tesla for it to even be considered.
Currently, neither Musk nor Tesla will disclose which of the four states will be chosen to move forward to the next stage of the Gigafactory planning process, but according to what Musk told Chinese reporters last week while launching the Model S in China, Tesla now has two locations it is seriously considering.
For now, Musk says the two sites will be developed in tandem right up to and including the breaking of ground and the start of construction. Then, he says, Tesla will pick one or other of the sites.
As for the unsuccessful site? Although Musk says Tesla will be “spending more money that would otherwise be the case to minimize the timing risk” in order to develop both sites to the point of building construction, Bloomberg says Musk hints a second Gigafactory may ultimately be needed. And if Tesla already owns that site, we’d guess Tesla will have far less worry getting the second site up and running in record time.
Two Gigafactories? That’s a lot of consumer-grade battery packs. And a lot of electric cars.
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