That's the way politics/business works. Tesla's first gigafactory was always destined to be built in CA, all the window dressing only served Elon's interests.
I find this stuff insanely annoying. California has a horrible business climate from a tax/regulatory point of view.
So they have to pass laws giving special breaks to get companies to locate there that otherwise would never consider it.
Of course, smaller businesses don't get these tax breaks; only giant rich companies do. Sigh.
I think it makes much more sense to reward states with better business climates; if other states see this happening and take note, perhaps they'd consider reforming their own onerous regulations and taxes, benefitting everyone rather than a few rich companies.
Dramsey. I have owned businesses in CA for over 40 years and would dispute your claim of "horrible business climate". What links can you provide to demonstrate this claim?
I'm no expert, but many believe PK is http://www.nytimes.com/2014/07/25/opinion/paul-krugman-california-tax-le...
I operated a business in california (los angeles) for 15 years and finally left for Arizona. The taxes and regulations in California are horrible.
Moving to Arizona I saved several hundred thousands a year in reduced taxes and expenses.
We still have a home in Cali as we have family there and we go back for the summer but really the grass is actually greener on the other side.
I'm surprised to hear the grass is greener in Arizona.
@Ohmman; it's just very, very tall and full of prickles.
@Dramsey You forgot Tesla was actually STARTED in California? So were Google, Yahoo, eBay, HP, Intel, Netflix, Facebook, Oracle... What's wrong with this business climate if it could produce such a nice crop?
If you read Elon's biography he made a point to move to California/Silicon Valley after graduation because in his mind that's where things happen. Glad that he had that foresight.
@socalsam Why didn't you move to China or Vietnam? These are much cheaper places to run a business. Yes that's a good answer. Cost is only a small part of a business.
The most important thing is if your business can stay the most innovative and competitive in the industry. Califonia does provide a lot people, either in the technical or the financial field, with progressive thinking that fit exactly the need of these kind of business.
@renwo S alseT
"That's the way politics/business works. Tesla's first gigafactory was always destined to be built in CA, all the window dressing only served Elon's interests".
I don't believe that's Elon's message to other four states participating in this bid. So what's your point? Teaching others a lesson on how politics works?
Krugman correctly points out that California has had some wilderness years which neither political party had the will to address but now with a strong governor with a mandate, things are changing. Regulation breeds regulation but it isn't all bad. The totally unregulated business climate of Arizona has its problems too. Tesla and a number of other ventures have helped kick down some doors to address regulatory overreach but are not throwing the baby out with the bath water. They know they've been losing businesses to other states and want to correct this and the numbers show that is happening.
Arizona is a state that is so unregulated we might as well say zero, yet it has to pay companies to relocate here. Then there is the war among cities to give out more cheques. Come here and get a property tax exemption, a sales tax exemption on energy, a sweet deal on water, a free power substation, etc. Then do what you want because we have no consumer protection laws and won't utter a peep about pollution. If the lack of regulation is so good for business, why do we need to pay businesses to come here?
My state shot itself in the foot by continuing to block Tesla from selling cars here. If I were in Elon's position, I would never consider a state that went out of its way to make it difficult to sell my product.
A/1. I made a statement, the point is whatever you conclude it to be, based on your own intelligence, education, politics, life-experiences, biases, etc.
I honestly don't think the decision has been made yet. Tesla is playing hard ball. Good for Tesla, its shareholders and electric vehicles in general.
The purpose of open auction is to improve Tesla's negotiating positions. Gossip has its purpose too. It is to make impression that the whole auction process is just a smokescreen to turn other potential participants off.
Nothing is over untill it is over. Gigafactory will go to the highest bidder. That's how auctions work.
A/1. You are right up to a point, but there is much that goes on behind closed doors that makes it far more than just an auction. Consider SpaceX, Solar City and numerous other EM investments that are part of any horse trading or other future Tesla plans that involve state cooperation.
California is not a bad state to do business in? With 2 major exceptions (Silicon Valley and SoCal with it's large and experienced aviation industry population), perhaps someone can point out how many companies are moving here from other states, especially those in manufacturing.
Emblematic of California's dysfunction and corrupt politicians? The California "High Speed" Rail. It's what inspired Elon's Hyperloop.
Krugman is disingenuous at best as usual. Anybody know how the stock market has done in the last year? How about companies like Facebook? California has been the recipient of massive tax gains from Silicon Valley companies' employees who have cashed out or exercised options. Our politicians count on the trend continuing, spend the money and when things change (surprise!) we're back in trouble. Silicon Valley is saving California but is not representative of the whole state.
Krugman should step out of his leaning Ivory Tower when it comes to health insurance. My rates went up 24% last year, 250% in the last 5. Talking to a friend who's a doctor and another who works for an HMO (both are Democrats and not opposed to Obamacare), rates and reimbursements will have to go up a lot to cover the increased costs.
TM/Elon are in a great position and whether they are purposefully pitting state against state or just letting them go after each other with concession, as a stockholder, I really don't care. Just get the factory started already!
California has closed the gap in terms of who gets 'picked' but I doubt a final decision has been made IN FAVOR of California. IMO TM is ready to get started in Nevada and is seeing if Cali can come up with more concessions (call them what you like but they are concessions). IMO both states will eventually have a Gfactory as more than one will be needed.
I may be wrong but I still think Nevada has the best chance of being first with Cali now being second. Up until recently I thought it would be Nevada, Texas then #3 in Cali.
Right, "especially those in manufacturing"... and textiles and footwear and horse-shoeing.
A bit of politics is tugging this thread a bit off point, and although AZ may offer some moderate business incentives, the political climate there makes it a hard place for some to even think about doing business. Seems the only "things" well regulated in AZ are people seeking a better life from a Mexico and Central America.
But....that's another story, and no replies necessary.
Too bad the distance for shipping giga batteries west from NY make the east coast a non-starter. We here have some unbelievable business incentive programs and a hugely available, skilled, workforce coupled with amazing tech hubs.
@oildeathspiral Your two exceptions happen to account for the largest portion of California's economy and what the country needed the most. High tech, internet, medical reasarch, aerospace and entertainment happen to be what this country are relied on to be competitive in this global economy. I don't think that old industries like apparel, auto, oil, steel making, or whatever the green grass guy's business is, can support the high standard of living of Americans too much longer. The rest of the world can do all of them and some even better and cheaper than us already.
I expect the first announced location will be a decoy to expedite a deal on the real location. They may even break ground at the first location if they need to.
I heard that Elon Musk wants to power a significant portion of the factory using solar. There's no place sunnier than AZ. It has 3 of the top 5 cities with most sun. And it has plenty of cheap land and labor.
City % sun
Yuma, Arizona 90
Redding California 88
Phoenix, Arizona 85
Tucson, Arizona 85
Las Vegas, Nevada 85
El Paso, Texas 84
Fresno, California 79
Reno, Nevada 79
Flagstaff, Arizona 78
Sacramento, CA 78
Pueblo, Colorado 76
Key West, Florida 76
Albuquerque, NM 76+
Nevada makes the most sense for the GF. Short distance from TM factory by rail, low taxes, no state personal income tax.
Still, I would prefer that Tesla pay incremental $ to increase production at existing battery factories.
You might have noticed that some manufacturing is coming back to the US (ie. Apple), but please don't think it's because of cheap labor. It's because of advances in robotics. However, they still need someone to guard the factory door. Whoopee, Texas here we come.
There is some interesting coverage of the Gigafactory location issue at www.transportevolved.com. They assert, the last time I checked, that construction had begun at Reno about a month ago and was terminated just yesterday.
@renwo: Dramsey. I have owned businesses in CA for over 40 years and would dispute your claim of "horrible business climate".
Hey, really? Me too! Not for 40 years, admittedly; some friends and I ran a small consulting company for about 10. The number of hoops we had to jump through just to deliver contract software was ridiculous.
What business are you in?
What links can you provide to demonstrate this claim?
Seriously? The idea of California as a state with onerous business regulations and taxes is honestly foreign to you? Well:
This article on the best and worst states for business says:
[California] is a state that continues high personal income tax rates and regulates with a very heavy hand. Its top, marginal tax rate of 33 percent is the third-highest tax rate in the industrialized world, behind only Denmark and France. This situation creates a bias against savings, slows economic growth and harms competitiveness.
Or how about this: The Economist Ranks California One of the Four Worst States for Small Business
I mean, this isn't exactly a secret. California has lots of advantages, mainly a good climate and educated work force. Not much else, though.
The only reason Tesla's building cars in California is because they got a giant manufacturing facility dirt cheap.
@Dramsey - couldn't agree with you more. Its funny, those that actually have run a business in california seem to know what a terrible business climate it has. I mean the weather is great but if you are trying to run a small business and don't have the luxury of being a multibillion dollar corporation, who can get special consideration from the government, you are going to get screwed with fees, taxes and BS fines.
Between the state of california, city of los angeles the amount of nonsense I had to deal with from idiot government employees whose only job was to try to find more and more ways to screw us, and try to take money from us was too much to bear. I finally sold my business and relocated my family.
Glad to be gone. California, great place to visit (certain areas) just glad I'm not living there anymore.
@socalsam Why didn't you move to China or Vietnam? These are much cheaper places to run a business. Yes that's a good answer. Cost is only a small part of a business.
@carlk - Sure carl. What a fantastic idea. how could I be so foolish and not see the folly of my decision to relocate to a state where I have better quality of living than what I had in california. I mean, forget the fact that living in Scottsdale affords me the ability to not have to sit in the 405 in traffic on a a 1:00 on a tuesday afternoon. I mean, moving the vietnam is certainly the smarter decision. Way to post a logical comment.
Look- I lived in Cali for over 3 decades. The weather is great. But between the traffic, the high cost of living, the congestion and the fact that much of southern california is deteriorating into a 3rd world country, i was glad to get out.
If all you know is the golden state, then you are unaware that there is a world outside of california that is a lot less dysfunctional, less oppressive and offers a better opportunity to raise a family.
11% state income tax???? couple that with federal taxes, city taxes permits, fines- no thank you.
California- great place to visit- still have tons of family there, hell, we kept a home there for the summer. but Im happy Im not living there full time.
Ah, @socalsam, you are forgetting the real reason we are all here in CA...
We kill mosquitos here before they are born. I guess that makes me "pro choice".
I spent time in AZ when I got my masters - not going back, sorry @AR.
There'll likely be two Giga-winner states.
I see nothing cynical about how Elon motivates states to participate in an economically productive, problem-solving, and hopeful new enterprise.
These giga factories will yield greater tax revenues than the incentives cost.
Landing a Tesla factory in your state is financially and politically a no-brainer.
To be a governor and not try hard to bag this one is like a dereliction of duty.
IIRC, Tesla/Elon said some time ago that they would break ground at the first Gigafactory site in June They said that after that they might break ground at an additional site or sites. However, the decision on which site to develop first would would be made before the end of the year.
There are some suspicions that the June groundbreaking occurred in Reno at the construction site mentioned by kmmcdonald above.
My take-away: if they do groundbreak at two sites,both might be developed to completion, but one of them will be pushed to completion first.
No I've called Texas and Indiana home but I wouldn't want to live anywhere else than here in California. Not only it's a great place to live but there are also such great opportunities and open minded people that it's hard to find in most other places. Being able to become an early adapter of Tesla, both the car and the stock, is just one of the examples of the benefit of living here. Neither would not happen if I did not wonder into one of the first Tesla stores in the country while going to Santana Row for dinner. Neither would these happen if I lived around close minded EV haters too. Paying a little more taxes, which do come back to help most of us, is really a small price to pay compares to the benefit of living here.
Yeah too many people and bad traffics but that's only because there are too many people who think like me. There is no good way of preventing people from coming here other than bidding up the housing price to a prohibitive level for new comers. Many people, especially those brilliant and ambitious young people, are still not turned away because of that. Take a stroll down Castro street in Mountain View or SOMA in San Francisco you would think the entire Stanford and MIT graduating classes are relocated here. No it may not be ideal for old f... like us but I still love living and working in this high energy environment.
I find it weird that certain people who took cue from the so called "news" would jump on any opportunities to bash California's economy while never mention those poorest of the poor red southern states. A lot of hypocrisies, or perhaps some jealousies, are going on here. It's typified by no other than the biggest California basher Rick Perry who revealed in a recent interview that he's considering moving to California after his term ended and "who wouldn't want to live in California?". What about the high taxes and dysfunctional government now?
Neither would happen if I did not wonder into one of the first Tesla stores... Not "Neither would not happen"
We really need edit function!
I have a friend who works at Solar City, we talked for 30 minutes About this yesterday, To make a long story short, I told him I'am about 90% sure it will be in Ca, he said he doesn't think it will be in Ca! He knows it will be in Ca.
Perhaps if you are in the exploding fertilizer business, it's better to live in Texas. You definitely won't need any regulations and can feel safe knowing you'll never face the consequences of your actions.
On April 22, 2014, the U.S. Chemical Safety and Hazard Investigation Board released the preliminary results of its investigation into the explosion. It blamed the disaster on company officials' failure to take basic steps regarding safe storage of the chemicals in its stockpile, as well as inadequate federal, state and local regulations regarding the handling of hazardous materials.
@SamO Yes a lot of the tax dollars and the big bad government oversights actually went into protecting the lifestyle many of us value. As I mentioned I have lived in Houston for many years. I would never want to set foot on the east side of the city where all the refineries are located. Californians could pay much less taxes if the state allows unchecked oil and gas drilling on land and offshore but I'm so glad the state does not want to become another Texas or China.
To each his own. I prefer less congestion, less taxes, better quality of living.
@socalsam I absolutely agree. I was just ticked off at people like Dramsey who would jump on every opportunity to bash a place they do not even intend to live. Just like non-owners who bash the Model S. Go ahead drive the car you like but what's the point of arguing with people who actually want the car?
And we also need to recognize the definition of quality of life can be very different from a twenty/thirty something young man and a sixty year old retiree.
Im 43. Again- I lived in LA for 30+ years. There are parts that are great. There are parts that are third world. Not saying Scottsdale isn't like that but I could not send my kids to public school. I had to send them to private school because where I lived, the public schools were so bad and frankly english wasnt the primary language spoken Nothing wrong with being bilingual but the kids and parents at the public schools in my area did not value education. Dropout rate- very high. School fights, teen pregnancies run a muk. I had not choice but to send my girls to private school at a whopping 24k each.
So suffice it to say that after we moved and have our kids in a charter school in Scottsdale, where the level of education is superior to the almost 50k I was spending for elementary school made me happy when I was able to receive that education for my kids for free.
My commute which consisted of a 45 minute drive daily to go 8 miles was drastically reduced and in 3+ years I haven't sat in more than 2 traffic jams.
My business after moving to scottsdale has literarily quadrupled after leaving LA as I was able to get a better facility for less money and hire a better quality employee pool.
Granted this is applicable to my situation but Im very glad to be out of california and other than the weather, there isn't much to rejoice about there, at least in LA where I lived.
As far as bashing the Tesla- i just ignore those threads here. My car comes monday and Im excited about it but I can also understand that some get annoyed by the constant cheerleading that occurs here. Not saying anything about you as I don't really know you or your views but I think the Tesla is a great car but certainly there is room for improvement which I suspect will occur over time.
With regards to the Gigafactory- I would bet money that despite all the recent news stories that it doesnt open in Cali. While I would love for it to go to AZ to benefit my local economy, nevada makes the most sense.
"Californians could pay much less taxes if the state allows unchecked oil and gas drilling on land and offshore"
How about unchecked electric battery production on a massive scale? As far as I recall Elon wants decisions related to environmental protection to be made fast. That is one of main criteria.
I am not bashing California by the way. I absolutely loved it. Especially Palo Alto.
China town in San-Francisco? Not so much.
@AI1 Chinatown is ok for a quick bite of dium-sum. Japantown is nice for having some great sushi. Palo Alto has quite a few Michelin stared restaurants not too mention the little Napa Valley has two 3 Michelin star restaurants. None of these I would think could be found in most other areas in the country. No this is not a perfect place but talking about moving away for a better life style is a bit too much of a generalization of what a better life style for everyone could be.
@socalsam What you said comes with the territory of living in big cities. These are not problems of California but problem of living in big cities. You still can avoid any of those undesirable areas around LA and be able to live a great life there but I fully understand why you made that decision.
Carl- parts of California are great. But Los Angeles is slowly turning into a complete pile of poo. If it was to for my parents there and the strong family ties, I would not keep a second home there that my wife and kids spend the summers at. I'm glad to be out and enjoying the new life in Scottsdale.
Socalsam - understandable personal choice regarding school for your kids.
The irony is, the Scottsdale school isn't free. We all pay for it, as we should.
The LA public schools have just as much money, (or more), but they are not managed for success. Interests now dominate that have nothing to do with helping our kids.
Every kid in our country deserves a free education at least equal to what you had to go to Scottsdale to get.
For me personally, I love California, so I pay the freight for great education for my kids, twice. Once in taxes, and again for private schools (which are amazing).
Nonperforming public education affects many states, and as Carl said, especially major metro areas.
Vote for reps who don't pander to lobbies that are tanking public schools.
The world is defined by the education we give our kids.
California was once defined by the education it provided it's kids and I was a product of that (under the stewardship of the 1st Gov. Brown). I have sadly watched as a procession of buffoons have destroyed it.
Good discussion about quality of life, traffic and education.
These all may influence where TM completes and operates their first Gfactory. While I do not want to see 'corner's cut' that might cause an increase in risk of accidents/injuries at any particular location I would just like the GF to open asap.
It appears we are agreeing that New Mexico and Arizona are probably
'out' for the first GF that is operational. So, that leaves Nevada, where I believe we can all agree TM has contracted for initial site preparation. California, which is now saying all the right things and passing legislation to make it easier to complete
building a GF but we see no broken ground. And, finally Texas, which does not allow direct sales but has few obstacles to building the GF but also has seen no ground breaking.
So, it is quite possible that TM will start building a GF in both Nevada and California simultaneously and continue to push each state/locale to see which state will present the most obstacles to completion going forward.
Cost wise I would bet Nevada would be better but politically (and in the TM boardroom) California would be better.
Like all here. Most of these are opinions. I have never lived in California, Texas or Nevada so I can not bring that perspective to this discussion. Ultimately I just want to see the darn thing built.
@samo: Perhaps if you are in the exploding fertilizer business, it's better to live in Texas. You definitely won't need any regulations and can feel safe knowing you'll never face the consequences of your actions.
I don't suppose you've ever Googled "california refinery fire", have you? Richmond sure seems to have them frequently (1999, 2007, 2013...) and all at the same Chevron refinery in this case. How are those CA regulations working out for 'em? Think they've paid the consequences of their actions? What would you be saying if the same fertilizer factory in Texas blew up three times?
Look, California's a great place (I still own a condo there). But like any state, it has its disadvantages, and saying that it's not a very business-friendly state isn't an opinion; it's a fact: higher taxes and more regulation make running a business, especially a small business that doesn't get-- what did that cited article call it?-- oh, yeah, "property tax benefits" like the big boys get, much more expensive than in other states.
It's up to the individual business owner to decide if the advantages outweigh the costs. Of course, if you're a big boy like Apple, Google, Oracle, and Tesla, you can get special laws passed to benefit you. That does kinda change the equation.
Of course, many other states do the same thing, but it's not very fair to point to the businesses that get special breaks as proof that any particular state has a "good business climate".
I have no problem with paying my taxes to support the school system. But when those taxes go wasted by nincompoops in elected office and unions whose sole goal is to look out for their members and not their customers, it pisses me off. I agree- every child deserves a great education but the idiots in charge of California have destroyed that possibility.
I don't sit here and pretend that everything In Arizona is a bed of roses. Plenty of idiot politicians here as well. It's just that they haven't quite destroyed the state as the folks in Cali have.
I think when the money came too easy for a while (decades), the mindset that anything could be afforded and "fairness" should choose took over. The dynamic base can be bled to death, however.
Good point about the industries that are the largest portion of CA's economy. However, not everyone can or wants to work in them. These are the people that are hurt by CA's anti-business climate when businesses decide to locate or relocate outside of CA. And there are a lot of them.
renwo S alseT
Look at Nucor Steel's new Pennsylvania plant as an example of how the fracking boom has greatly benefited U.S. manufacturing and blue collar jobs. Cheniere Energy's massive LNG export facility is another, with many well paying jobs that don't require college degrees. There are numerous other examples in the many articles that have been written on the subject.
I know many here unequivocally hate fracking but we would be in a severe recession if it were completely banned, with the poor and middle class greatly suffering. Our air would be dirtier too...