Before the First Tesla Gigafactory Has Even Been Built, CA Wants to be Home to Tesla’s Gigafactory 2.0

Recently, the state of Nevada was crowned winner in Tesla’s search for a suitable host state for its first lithium-ion battery reprocessing and manufacturing Gigafactory. But while Reno, Nevada might be home to the first Tesla Gigafactory, Tesla CEO Elon Musk has hinted that Tesla will eventually need more than one Tesla Gigafactory to produce enough low-cost lithium-ion battery cells to keep up with Tesla Model S, Tesla Model X, Tesla Model ≡ and any future Tesla electric car models yet to be unveiled.

Like an athlete who has just missed out on a podium place in an important race, the state of California is already in training to win the next race and become home to Tesla’s next Gigafactory.

If at first you don't succeed, try again: California wants to be first in the hunt for a second Tesla Gigafactory.

If at first you don’t succeed, try again: California wants to be first in the hunt for a second Tesla Gigafactory site.

As the Silicon Valley Business Journal reported last week (via Autobloggreen), a number of Californian Congressional leaders are already lobbying Tesla to consider California as a suitable place to build the next Tesla Gigafactory — Gigafactory 2.0, if you will — by writing a letter to Tesla CEO Elon Musk.

Spearheaded by Congressmen Paul Ruiz, Mike Honda and Jim Costa, the letter makes a passionate plea for Tesla to put California at the top of its list of future Gigafactory states, citing California’s skilled workforce, exemplary environmental record, and commitment to renewable energy and green transportation. While the three Congressmen are the driving force behind this California Congressional Delegation however, the letter also carries the signatures of twenty-one other Californian legislators keen to see Tesla bring a Gigafactory to California.

“The California Congressional Delegation encourages Tesla Motors to bring the next state-of-the-art Gigafactory to our state,” the letter begins. “California offers tremendous advantages to business, including our diverse, highly-educated workforce, a high quality of life and an array of abundant renewable energy resources and consumer incentives found nowhere else in the United States.”

Highlighting Tesla’s high sales rate in California — one third of last years’ total production of Model S cars ended up in the Golden State — the letter carefully emphasises California’s commitment to plug-in vehicles and green technology, along with its consistent high ranking when it comes to U.S. energy efficiency.

With Tesla’s main automotive production line based in Fremont, California, building a Gigafactory nearby makes perfect sense, the delegation seems to imply.

But while the idea may work on paper —  a Californian Gigafactory within easy reach of Tesla’s Fremont facility would certainly cut down on transportation costs and CO2 emissions — California’s tough environmental policies and notorious bureaucracy make building any new factories particularly arduous and time-consuming. However, when the state of California became a late-entrant in the  race to become the first host state for a Tesla Gigafactory, California Governor Jerry Brown did promise to work alongside Tesla and the Californian legislature to cut any necessary red tape needed to expedite Gigafactory construction, as well as match the $500 million incentive package being offered by New Mexico, another Gigafactory state finalist.

Reno, NV, is the site of Tesla's first Gigafactory. California wants to be second.

Reno, NV, is the site of Tesla’s first Gigafactory. California wants to be second.

Should Tesla choose to look at California in the future, we’d guess those offers would still hold true, yet we’re also expecting it to be some time before Tesla executes any form of overt hunt for a suitable location for building the Gigafactory 2.0.

For a start, Tesla’s first Gigafactory hasn’t even been built yet, and while construction is now well and truly underway on the 1,000 acre facility in Reno, NV., it’s going to be several years before the Gigafactory is ready to produce its first lithium-ion battery packs.

In the interim, Tesla has to not only fund the remainder of Gigafactory construction — a total of more than three billion dollars even after accounting for the estimated $1 billion investment from Gigafactory partner Panasonic and $1.25 billion tax breaks and abatements from the state of Nevada — but also finalise and fund the continued pre-production processes for its Model X Crossover SUV, which is due to enter into production early next year.

In short, even if it wanted to, we can’t see a way in which Tesla could fund the search for, or construction of, a second Gigafactory until at least 2018. Unless there’s something Elon Musk knows that we don’t.

It’s no surprise then that Tesla remains quiet on this particular story and the open letter to its CEO Elon Musk. But while Tesla won’t comment on a second Gigafactory, Musk has gone on the record multiple times to predict a future where more than one Gigafactory will be needed by the Californian automaker. And given Musk’s driven vision of affordable, electric cars for all, anything is possible.

There is one thing we can say for sure however: California can’t be faulted for a little bit of forward thinking.


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  • Campo

    Stop the corporate welfare! Tesla is a money losing company. I dont want to give them a penny of my tax money.

    • Marcelo Pacheco

      BS. Tesla is a brilliant company and you know nothing about business. You are probably a paid anti Tesla shill. Tesla is scaring the hell out of old car companies. If Tesla stopped investing today to scale up the company they would be much more profitable than Ford, Toyota or Nissan. It is absolutely normal for a company experiencing rapid growth to loose money while rapidly increasing its production rates. It is actually loosing far too little money for its rapid increase in production. Again, Tesla is a brilliantly managed company, unlike the companies that pay you to post this nonsense.

      • Campo

        Who is paying anti Tesla shills? I would like to sign up!

        • Marcelo Pacheco

          If you are not being paid to post this, then you really should go back to school and learn. Anybody with a business or economics degree understand why Tesla is a brilliant company. I’m sad for you. I don’t even have a degree and understand perfectly why Tesla is a fundamental part of the blueprint to rid us of dependency on oil and middle east wars.

          • Campo

            If Tesla is so great then why do they need all those subsidies? Tax credits for their customers, huge concessions from state governments etc.

          • Marcelo Pacheco

            Any multi billion dollar investment asks for such advantages. Anywhere in the world. Again, go study up on economics and business to understand how the world works.nThe fundamental difference is some business ask for tax breaks without actually committing to doing what they promise. Tesla is 100% performance bound in this deal with NV. They actually broke ground on multiple factory sites (in multiple competing states) before reaching the deal. VERY DIFFERENT from the other car companies.nThe Tesla Giga Factory deal in NV is US$ 1 in economic subsidies for each US$ 80 in economic activity locally. It is an awesome deal. Elon stated they chose NV even though they have a better offer from another state. But they see Nevada as a state where red tape is minimal and things get done quickly.

          • Campo

            Tesla is selling 35000 cars this year. Gm ford etc. Sell millions.

          • Marcelo Pacheco

            Doesn’t matter buddy. Like I said, you must understand economics. Your statements show very clearly you understand nothing about economics.nStock prices reflect future earnings expectations. 3-8 yrs ahead.nIn 4 years the Tesla Model 3 gets to the market, selling 300 thousand/yr at a much higher profit margin than GM or Ford. Tesla is selling US$ 20-30 billion per year in cars. However unlike Ford and GM they don’t have to share their profit margins with dealerships. Unlike Ford and GM they aren’t tied to car dealerships that are continuously trying to screw their customers over. Unlike Ford and GM they aren’t afraid to innovate at breakneck pace, so Tesla is always ahead in the technology game. Profit margins are just as important as raw sales numbers. It’s better to have 1/5 as many sales but with 4x the profit margins.nThe number of huge differences between Tesla and the rest of Detroit are huge. Old car companies are run by accountants and lawyers. Tesla is being run by engineers, humongous differences.nGM stock prices reflect the expectation that they will screw up big time again in the near future, with another huge recall.nTesla stock prices reflect the fact that Elon Musk has a phenomenal success track record at out innovating its competitors. And he personally committed to staying CEO of Tesla Motors until Model 3 production becomes a reality. They guy works like a horse.nElon asks 110% from everybody because he is giving 120% of himself everyday. No old car CEO is doing that.nYou can’t fully comprehend Tesla without fully understanding who Elon Musk is.

          • Campo

            Yes Elon is a genius. He is a brilliant promoter and salesman. When you say stock prices are based on futer earnings is shows that you dont understand economis and the psychology of the stock market. The model S is a turkey. It is owned by rich people as a toy. Nobody who ownes a Tesla doesnt have two or three other cars to drive. If electic cars ever have a future it will be a small commuter car in cities that adopt a zeo emission law in their core. Not a 5000 pound sports car.

          • Marcelo Pacheco

            Model S is not a Turkey. It is a much of a toy as someone that owns a US$ 100k+ BWM/Mercedes/Ferrari.nActually unlike those other ICE cars, the Tesla Model S is an economic car for high milleage uses. Once paid off, the Model S is 80-90% cheaper to drive than any non hybrid car.nNot only it costs 80% less to charge it with electricity per mile, but there is also the superchargers that provide free electricity when away from home.nThe EV maintenance is way cheaper than regular cars. Its soo much cheaper that dealers don’t want to sell EVs since they make so much of their profits from service instead of sales.nIf someone drove a Model S for 2 million miles, with solar panels + superchager the car would be fully paid off just on gas+maintenance savings, that’s right, the full purchase price of the car is paid off from savings.nPlus for most home owners, they can offset their electricity costs with solar panels, try making gasoline from sunlight.

          • Campo

            Modern cars dont require much maintenance. They go 500 miles on a tank and it takes 10 minutes to fill up. The model x will be marketed to a whole new segment. It is not clear that a 50 thousand dollar electric with a 150 mile range can appeal to a mass market. If the x fails the company fails.

          • Marcelo Pacheco

            Every ICE car needs engine oil changes, transmission oil changes, spark plug changes, and a few other maintenance items.nEVs only maintenance to speak of is tires and breaks. But since they use regen breaking mostly, their breaks wear substantially slower than non hybrid ICE (hybrids also have regen breaking).nThe math does add up, anyhow, with solar panels and feed in tarifs, you can change from paying for electricity to earning a check every month.nI did this math once in a forum. I don’t want to do it again. I proved that a Tesla Model S pays for itself for any heavy commuter (200 miles per day for 200 days/yr for 10 years = 400 thousand miles just in commute miles). I showed the car comes out free after 10 years for 200 miles / day commute.

  • Marcelo Pacheco

    California must reduce its regulatory complexity and red tape. You lost the Giga Factory due to your crazy NIMBY mindset. If you continue with this crazy mindset, you will get zero Giga Factories. In the long run I believe Tesla will have 3 or 4 factories, since Li-Ion batteries will be used not just for Tesla but also for Solar City in extreme scales (once US$ 100/kWh battery packs are a reality).