California Legislature fails to reach a deal on Tesla battery factory

A detail of the rear end emblem of a Tesla Model S at the electric automaker's Santa Monica showroom.
A detail of the rear end emblem of a Tesla Model S at the electric automaker’s Santa Monica showroom.
(Jay L. Clendenin / Los Angeles Times)

SACRAMENTO — Looks as if California’s effort to attract an electric car maker’s battery factory has run out of juice, at least for now.

State lawmakers left town without seeing, let alone debating, a much-anticipated incentive bill that was supposed to entice Tesla Motors Inc. in Palo Alto to build a $5-billion battery factory in the Golden State.

The failure to reach an accord — at least on the part of Gov. Jerry Brown’s top aides — wasn’t for lack of trying.


The governor’s Office of Business and Economic Development has been conferring for months with Tesla brass, including Chief Executive Elon Musk.

The parties even came up with draft legislation, which quickly became controversial.

The 35-page proposal called for waiving large portions of the landmark California Environmental Quality Act to speed construction to meet Tesla’s timetable for getting its so-called gigabattery factory running by 2017. The draft also hinted at tax breaks that reportedly could run as high as $500 million.

Environmentalists and some lawmakers grumbled that the CEQA waivers were too extreme.

As the Legislature sprinted toward adjournment, the talks lost some momentum, said policymakers not authorized to discuss the sensitive issue. “The administration gave up about a week ago,” said one of the policymakers.

Another Capitol insider suggested that Tesla wasn’t ready to cut a deal.

“Tesla still needs to get all the pieces in place about what the project would be so that the [proposed] statute would be as helpful as possible,” he said.

Tesla spokesman Simon Sproule wouldn’t comment on the negotiations with California or the other four states in the running: Nevada, Arizona, New Mexico and Texas. All operate on different legislative schedules, he said, declining to speculate about how long Tesla could wait for an agreement.

“The process is still ongoing,” Sproule said.

Musk has called California a “long shot” and expressed concerns about the state’s cumbersome environmental regulations.


California locales openly vying for the Tesla plant include Sacramento, Stockton and Imperial County.

Two state senators who offered to carry Tesla incentive legislation said they haven’t given up trying to bring the battery plant to California. Sen. Ted Gaines (R-Rocklin) said he’s prepared to ask the governor to call a special session of the Legislature if that would help close a deal before the end of the year.

Senate President Darrell Steinberg (D-Sacramento) said he expects negotiations to continue through the fall so that “the next Legislature has the opportunity to finalize a good deal for California.”

People privy to the talks predicted a Tesla bill probably could be passed in January when lawmakers return to the Capitol. The delay, they said, shouldn’t cause problems for Tesla.

“The administration continues to engage in productive conversations with Tesla,” said Mike Rossi, a senior Brown advisor, “and remains optimistic that we can reach an agreement that meets our common goal of adding jobs in California.”

Twitter: @MarcLifsher