Tesla Motors Wins Over Authorities In New Jersey, California

By Martin Blanc on Jun 6, 2014 at 7:30 am EST

Tesla Motors Wins Over Authorities In New Jersey, California
Tesla Motors Wins Over Authorities In New Jersey, California

A bill proposed by Californian lawmakers will incentivize Tesla Motors to deploy its multibillion-dollar battery plant in the state. In other news, a bill approved by New Jersey lawmakers will allow the automaker to directly sell its vehicles and bypass dealerships

After failing to make a list issued by Tesla Motors Inc (TSLA) of states that the automaker says it would prefer to deploy a multibillion-dollar battery plant in, California is moving to address Tesla’s grievances. Californian lawmakers have reportedly come up with a bill that seeks to incentivize Tesla Motors if it builds its highly-anticipated Gigafactory in the state. The bill will reportedly make it easier for Tesla to receive regulatory approvals in a timely manner; a concern Tesla had cited as a reason for not considering its home ground as it finalized its plans for the factory.

California, known for its stiff laws, is showing flexibility in order to persuade Tesla to make a $5 billion investment and create 6,500 jobs in the state by building its battery plant there. Hosting the world’s largest battery factory, which is slated to supply battery packs for zero-emission vehicles and other “green” technologies, also serves the state’s image as a leading advocate for environment-friendly initiatives.


The news came after Tesla CEO Elon Musk said in an annual shareholder meeting Tuesday that the company is considering breaking ground for the Gigafactory in three, instead of two, states. He said the first site could be announced as early as next month.

The states of Nevada, Texas, Arizona and New Mexico are frontrunners in the competition to host the Gigafactory. California, despite being Tesla Motors’ home state, was never considered because Musk believed the state’s “circuitous project-approval process could take too long.”

But with California trying to remove the bottlenecks Musk pointed out, that may change. We say this because the state holds a major edge over its competition: Tesla’s primary vehicle factory, located in Fremont, California, is merely 186 kilometers away from one of the possible sites (a former Air Force base near Sacramento) for the Gigafactory. Setting up the factory in California will help Tesla consolidate its operations and transport battery packs cheaper and an in a more timely manner than if it builds the plant elsewhere.

Tesla is aiming to time the completion of the battery plant with the launch of its mass-market Model E car in 2017, as the company’s increased production and sales volumes will require a consistent supply of battery packs in large quantities. Delivery times, therefore, appear to be the deciding factor in Tesla’s decision to choose a location for the much-hyped battery plant.


New Jersey Revises Stance On Tesla’s Direct Sales Model

In a separate update, the Associated Press reported that three lawyers in the state of New Jersey had presented a bill yesterday to remove a ban on electric car makers selling their automobiles directly to customers via company-owned stores.

The bill, which directly affects Tesla, was approved by New Jersey’s Assembly Consumer Affairs Committee with an absolute majority. Under the rules introduced, Tesla can operate up to four stores and an additional service station in the state. The automaker currently has just two stores in New Jersey, which were serving as display galleries while the ban was in effect.

Tesla had appealed in April against the New Jersey ban, said to have been lobbied for by auto dealers in the state. The fact that its case gained favor with the authorities tips the odds in its favor. New Jersey’s decision could also set a good precedent for the company, which is currently battling auto dealerships in other states as well.

Tesla rose 1.43% yesterday to $206.9. The stock has gained 35.7% year-to-date.

For an in-depth analysis on Tesla Motors Inc, refer to: Tesla Motors – Stock Drivers in 2014.

Which state, in your opinion, should Tesla build its Gigafactory in? Leave your thoughts below, and our analyst will get back to you shortly.

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