Tesla to Texas: How Do You Like Us Now?

Paul Sakuma/APAssembly workers put together a Tesla Model S at the Tesla factory in Fremont, Calif.
By Philip LeBeau

How's this for a trade: 6,500 manufacturing jobs and an investment of more than $4 Billion in exchange for the right to sell cars in a particular state.

That's one of the intriguing story lines surrounding the decision of where Tesla (TSLA) will locate a massive Gigafactory for producing lithium-ion batteries and electric storage applications.

Texas is one of four states named as a finalist for the massive plant, along with Arizona, Nevada and New Mexico.

So why is Texas such an intriguing candidate?

It all stems from the contentious relationship Texas lawmakers have had with Tesla in keeping the electric carmaker from selling cars in that state.

Until now, there has been little reason to believe Texas' ban on direct auto sales would be lifted, but the Gigafactory could change that assumption.

6,500 Jobs, $5 Billion Investment

The Tesla Gigafactory, wherever it's located, will provide a huge boost to the local and state economies.

There are few major manufacturing plants that bring in two or three thousand jobs, let alone one that would create 6,500 jobs.

All together the new battery facility will cost between $4 and $5 Billion, with Tesla investing $2 billion of its own money into the project.

Those are the kind of economic figures that are likely to make political and business leaders in Texas work hard to convince Tesla to build the Gigafactory in their state.

And what could they offer Tesla as an incentive to pick Texas?

Tax breaks? Sure

Infrastructure investments? Good idea.

The right to sell Tesla vehicles in Texas? Now you're talking.

And there's the rub. Texas lawmakers will be hesitant to reverse the state's ban on vehicle sales that don't go through auto dealer

Texas Auto Dealers Won't Give In

The Texas Auto Dealers Association is a very well-funded and politically powerful group. Over the last couple of years, it has spent millions of dollars and lobbied aggressively to make sure Texas auto sales go through Texas dealers.

For example,
in 2012 the Texas Auto Dealers spent more than $2.5 million on legislative elections in Texas and donated to 60 percent of the state lawmakers, according to an article in Green Car Reports.

Add to that the fact auto dealerships are often the biggest generator of sales tax in many counties in the lone star state and you see why Texas lawmakers passed a law banning direct sales from automakers.

Still, it would be considered political suicide to turn down the chance to land a major manufacturing plant that could have a huge impact on the state economy.

Tesla CEO Elon Musk has a very strong hand in a high stakes game of Texas hold 'em where the auto dealers have, until now, been throwing down a full house.

Does Musk have the cards to win?

If he does, Tesla could finally get access sell cars directly in country's second largest auto market.

Second Largest Auto Market in the U.S.

For the last few years Texans who wanted a Tesla had to buy it directly from Tesla's headquarters and then have the car delivered by a third party vendor.

While the setup is far from convenient, it hasn't stopped Texas from becoming one of the top markets for Tesla sales.

If Texas were to drop the ban on direct auto sales, Tesla sales in the state would likely increase substantially.

It would also give Tesla a huge win in its on-going battles with state legislatures that have either banned or are considering bans on direct auto sales.

Not a bad pay off for investing a couple billion dollars and adding 6,500 jobs to the Texas economy.

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It should be located somewhere Tesla can 'dump' bad batteries and byproducts.......
Which state has the most Desert and least number of people in the area....!??

February 28 2014 at 1:40 AM Report abuse rate up rate down Reply

Unions are dead, and let's keep it that way! Volswagon voted them down, and than God they did. They know the unions are the real evil.

February 27 2014 at 10:15 PM Report abuse -2 rate up rate down Reply
1 reply to William's comment

You go to school in Texass too??

February 28 2014 at 3:10 AM Report abuse rate up rate down Reply

Texas is awesome. You haters must be Yankees.

February 27 2014 at 9:05 PM Report abuse -2 rate up rate down Reply
1 reply to betty_brock's comment

Texas: "Where seldom is heard an intelligent word."

February 28 2014 at 5:55 AM Report abuse rate up rate down Reply

why do all the "big mouths" on this "huff&puffing princess" web site, only talk with their mouths, if YOU really LOVE Tesla, talk with YOUR money & invest in Tesla. In 5 years Tesla, is the next Solendra from Obama. . Get rich, invest, invest, invest.

February 27 2014 at 7:03 PM Report abuse rate up rate down Reply

As a Tesla owner in Texas, I have to say it wasn't as complicated to purchase as the article suggests. We purchased from the Tesla store in Seattle (my husband was there on business anyway and test drove the car), but I think you can also purchase online. We picked up the car from the Tesla Service Center in Dallas.

The difference in the Tesla experience vs a standard car dealership is that there was no massive car lot to choose from, but a showroom. The car was then produced and we picked it up 3 months later.

As for the battery plant goes, I say keep it clean or keep it out of Texas. We went through a nightmare with the Exide Battery Recycling Center and Lead contamination. Lithium is supposed to be safer than lead or nickel, but Lithium carbonate can be toxic.

February 27 2014 at 7:00 PM Report abuse +3 rate up rate down Reply

Don't build in Texas

February 27 2014 at 5:58 PM Report abuse +3 rate up rate down Reply

Clear example of how corporations and special interest groups own all politicians.

February 27 2014 at 5:37 PM Report abuse +4 rate up rate down Reply

2014~~~>http://www.teaparty-platform.com/ <~~2014~~YEE HAWWWWW ~TEXAS

February 27 2014 at 5:35 PM Report abuse +1 rate up rate down Reply

Screw Texas! That backwoods, bumpkin, redneck, bible-thumping, illiterate rat's ass of a state makes Mississippi laugh at its idiocy. Give it back to Mexico.

February 27 2014 at 5:17 PM Report abuse -1 rate up rate down Reply
2 replies to sheckyvegas's comment

If it weren't for Texas, you wouldn't be able to ride your tricycle to work each day...

February 27 2014 at 8:05 PM Report abuse +2 rate up rate down Reply

Mississippi? and you talk about Texas? Your state is full of ignorant nose-picking peckerwoods. We in Teas aren't worried, next good flood should wash you away.

February 27 2014 at 10:16 PM Report abuse rate up rate down Reply

With all the naysayers about Texas you would be thinking they are losing 1000 people a day. However 1000 people a day are moving to Texas. Of course those are the people who want to work not those who are looking for welfare and other handouts. Let the slackers stay up north where they belong.

February 27 2014 at 5:11 PM Report abuse +1 rate up rate down Reply