Tesla's $5 billion "gigafactory" goes to Nevada

Last Updated Sep 4, 2014 8:22 AM EDT

Tesla Motors (TSLA) has chosen Nevada as the site for its $5 billion "gigafactory," CBS News has learned.

The electric-car company isn't officially confirming the decision, but Nevada Gov. Brian Sandoval has scheduled a press conference Thursday for a "major economic development announcement." Sources say Nevada will announce it has won the intense five-state contest to host the factory. The site could provide as many as 6,500 jobs, plus other jobs that result from suppliers and other vendors setting up shop near the plant.

Tesla has already broken ground at a site near Reno, while all the while telling investors and other states that it could pull up stakes and move if a better opportunity presented itself. That spurred worries that Tesla was pitting states against each other in order to get the best deal. "I would not start counting jobs on Tesla now," Senate Majority Leader Harry Reid, who is from Nevada, said last month. "I'm not sure they aren't playing us."

Breaking ground on multiple states for a single factory is very unusual, but Tesla said it doesn't make sense to sit around losing time on developing its upcoming mass-market car, the Model 3, which could start at around $35,000.

"Any potentially duplicative investments are minor compared to the revenue that could be lost if the launch of Model 3 were affected by any delays at our primary Gigafactory site," the company said in a July 31 letter to shareholders. At the time, Tesla said it expected to choose the final location within a few months.

The other states competing for the factory included Arizona, California, New Mexico and Texas. In choosing Nevada, Tesla has picked a site just a few hundred miles from its main assembly factory in Fremont, Calif., USA Today reports. The company is headquartered in Palo Alto, Calif.

The gigafactory is expected to produce lithium-ion batteries for Tesla's growing line of electric cars. Japanese electronics company Panasonic has signed up as a partner for the plant, which will eventually span 10 million square feet.

Tesla CEO Elon Musk said in a July 31 conference call with investors that the gigafactory will cost about $5 billion through 2020. Tesla will probably provide 40 percent to 50 percent of that total. Panasonic will provide about 30 percent to 40 percent and other industrial partners could pony up between 10 percent to 20 percent.

The host state, Musk said, could be expected to provide 10 percent. Some critics worried that could mean a $500 million taxpayer investment from the winning state, and a coalition of budget watchdogs recently issued an open letter to the states telling them not to give away too many tax breaks.

Nevada may have offered Tesla "one of the largest incentive packages in the history of the U.S. auto industry," according to The Wall Street Journal.

Tesla shares closed down 1 percent Wednesday to $281.19 and were mostly flat in after-hours trading.

  • Kim Peterson

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