The Tesla electric car battery plant will be worth $100 billion to the state of Nevada, according to the men who crafted the deal.
Nevada Gov. Brian Sandoval and Tesla Motors Chairman and CEO Elon Musk on Thursday announced that the Palo Alto-based company's lithium-ion battery plant would be built outside the northern Nevada city of Sparks.
The $5-billion "gigafactory," where Tesla will produce batteries in partnership with Japanese electronics giant Panasonic, will be constructed on property known as the Tahoe Reno Industrial Center.
Tesla purchased the land and broke ground there in June, halting construction before actually pouring concrete while negotiations with the state continued, said a source with knowledge of the talks who was not authorized to speak publicly.
It was not immediately clear how Nevada representatives arrived at the $100-billion estimate of economic impact over the next 20 years. The factory could employ as many as 6,500 workers by 2020, Tesla has said.
It was also not clear exactly what incentives Nevada offered Tesla to draw the factory to the state.
The source said the first batteries would roll off the line in about three years -- when Tesla plans to launch its new Model 3, the "mass market" sedan. The company has said the Model 3 will sell for $40,000, or about half the cost of its current Model S sedan.
"We have reached an agreement with the Tesla motor company, subject to legislative review and approval, that will enable Tesla to build the world's largest and most advanced battery factory, right here in the Silver State," Sandoval said.
Sandoval and his state beat out California, Texas, New Mexico and Arizona for the Tesla factory. Gov. Jerry Brown and Sacramento legislators had lobbied fiercely to keep the electric car components in the state, where Tesla already builds and assembles its popular but expensive electric cars.
"I'm devastated for the 6,500 families who won't have the chance at these jobs unless they move to Nevada," said state Sen. Ted Gaines, a Republican representing the Sacramento suburb of Rocklin. "Tesla is a California-born company that the state has invested heavily in, and we want it to succeed. It makes complete sense for it to expand right here, close to its headquarters, yet they are headed out of state."
Gaines called the move to Nevada "a clear indictment of our business climate," and said Tesla's decision was a strong signal to legislators "about how hard they have made it to operate here."
Tesla representatives had stressed, as they weighed their options over the last several months, that a speedy beginning on the factory was essential to the company's plans.
Although Tesla's domestic sales for 2014 have been flat, the company has recently begun selling its Model S cars in England and China. The company has also begun production of a crossover SUV, the Model X, and is hoping to fast-track production of the Model 3.
All those vehicles, and the ability to sell them at a lower price, depend upon a steady supply of mass-produced batteries, which Tesla has said it cannot manufacture in sufficient number at its current production facilities in California.