Tesla picks Nevada for $5 bln battery plant

Michael Thurston
Elon Musk, CEO of Tesla Motors, is introduced by Governor Brian Sandoval of Nevada during a press conference at the Nevada State Capitol, September 4, 2014 in Carson City, Nevada
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Elon Musk, CEO of Tesla Motors, is introduced by Governor Brian Sandoval of Nevada during a press conference at the Nevada State Capitol, September 4, 2014 in Carson City, Nevada (AFP Photo/Max Whittaker)

Los Angeles (AFP) - US electric automaker Tesla Motors is to build the world's largest lithium-ion battery plant in Nevada, the state's governor announced, unveiling plans for the five-billion-dollar "Gigafactory."

The plant, plans for which were announced in July with Japanese electronics giant Panasonic, will bring nearly $100 billion dollars into Nevada's economy over the next 20 years, he said.

It will employ 6,500 workers directly and another 16,000 indirectly, and add some four percent to Nevada's Gross Domestic Product, Governor Brian Sandoval announced, in what he called a "historic day" for the western US state.

The deal with Tesla "will change Nevada forever and set in motion the creation of thousands of new job and stream billions of dollars into our economy," he said at a ceremony with Tesla boss Elon Musk.

"No need to say that this is a significant, historic day for all of us," he added, while noting that the deal is subject to legislative review and approval.

When completed, he said, the plant will be the "world's largest and most advanced battery factory."

Nevada was in competition with four other states bidding to host the factory: California, Texas, New Mexico and Arizona.

The state has pledged a tax incentive package worth some $1.25 billion over 20 years, according to the local Reno Gazette-Journal newspaper.

"This is a Nevada victory," said Sandoval, who did not comment on tax incentives. "We knew that this was an opportunity that we had to fight for," he added.

Senate Majority Leader Harry Reid, who represents Nevada, had announced the plans ahead of an afternoon press conference in Carson City where Sandoval announced the details.

"Most importantly for Nevada, this factory will create thousands and thousands of good-paying jobs and be so good for our economic development," Reid told a National Clean Energy Summit in Las Vegas.

The company said in July that it had opened a site in Nevada which could host the Gigafactory but that other locations were still being evaluated.

Tesla will run operations while its Japanese partner will make battery cells destined for the plant and invest in equipment and machinery, according to a joint statement released at that time.

Japanese media previously reported that Panasonic would invest as much as 30 billion yen ($290 million) in the plant.

- An auto industry star -

While Tesla produces relatively few vehicles, it has become a star in the sector due to keen demand and a reputation for high quality.

A surge in its share price over the past year has pushed its value over $27 billion.

Tesla's Model S sells for around $75,000 but it is working on a less expensive Model X that is expected to garner wider appeal.

In July Panasonic and Tesla said the plant should drive down the cost of batteries and eventually help popularize electric vehicles. The Gigafactory will produce battery cells, modules and packs for Tesla's electric vehicles.

It should "enable a continuous reduction in the cost of long range battery packs in parallel with manufacturing at the volumes required to enable Tesla to meet its goal of advancing mass market electric vehicles," they said.

At Thursday's announcement, Sandoval paid tribute to Musk, calling him "a rare visionary who has the courage to reach beyond and to convert the unthinkable into reality."

"We are determined to be a major part of moving our country and our global economy forward," he said, adding, "Today marks a continuation of that dream led by 21st century pioneers like Elon Musk."