California Pulls Out All Stops to Land Tesla Gigafactory

Tesla Motors' proposed “Gigafactory,” Elon Musk’s vision of a massive factory that would revamp the global supply chain for lithium-ion batteries and then sharply reduce their cost, still does not have an official location.

California was not even on the radar, as rumor had it the Reno, Nevada area was the frontrunner to land this factory that promises to employ up to 6,500 people — in fact, excavation of a proposed site has already been completed. Arizona, New Mexico and Texas were also in the running in the event negotiations.

But suddenly California is making the charge to woo Tesla Motors. According to the Los Angeles Times, California lawmakers would exempt Tesla, Panasonic and other potential partners from some of the state’s environmental regulations in order to move the Gigafactory forward. Democrats and Republicans are working with Gov. Jerry Brown’s office to pass legislation that would reduce the factory’s cost by as much as 10 percent.

Key to the Gigafactory establishing roots in California would be a rollback of some of the regulations that comprise the California Environmental Quality Act (CEQA). Revered by environmentalists as much as it is reviled by business groups, CEQA, signed into law by Gov. Ronald Reagan more than 40 years ago, has produced a massive body of environmental regulations that would overwhelm even the most seasoned environmental or business lawyer.

CEQA’s overall function is to oversee environmental reviews, mitigate potential damage by new construction and development projects, encourage public participation in the state’s environmental review process and improve cooperation between state agencies when it comes to making decisions that could have an impact on the state’s environment. Business interests claim the laws make California a difficult state in which to conduct commerce; nearby states have been able to lure companies away from California in part because of CEQA’s extensive reach. Public interest groups respond: Communities have a voice in how land is developed and point to public health and safety benefits. Now the state is poised to make some changes in the law to promote a gigantic clean technology project.

So why would California’s state leaders suddenly make a pitch to Tesla Motors and Mr. Musk, even though he has said the state’s chances of landing the Gigafactory are a “long shot?” After all, Gov. Brown is expected to cruise to re-election over his Republican opponent — though he has also been the subject of plenty of barbs over Toyota’s recent decision to relocate its U.S. headquarters to Texas from the Los Angeles suburb of Torrance. Legislative leaders on both sides of the aisle are cooperating, a rare spectacle in the state capitol.

At a time when all red and blue states are pursuing more clean technology investment (depending, of course, on who the donors are), any politician would want a project like that of Tesla Motors as part of his or her legacy. The timing of California’s pitch is also prescient: A few years ago, the state’s finances were such a mess that a half-billion dollar incentive package would have gone nowhere in Sacramento. Still on shaky ground, the state’s budget has improved. So, in the eyes of many, now is the chance to land a project that would have an economic multiplier effect and boost California’s reputation as the go-to place for clean technology. Or as one San Jose Mercury News writer has opined, such a move will put “CEQA in a shredder.”

Image credit: Tesla Motors

Leon Kaye has lived in Abu Dhabi for the past year and is on his way back to California. Follow him on Instagram and Twitter. Other thoughts of his are on his site, greengopost.com.