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California Isn't Getting That Tesla Gigafactory It Wasn't Going to Get

Scott Lucas | September 4, 2014 | Story Politics

That thing that probably wasn't going to happen—but looked for a minute like it might—is in fact not going to happen. Tesla Motors will be locating its massive, 6,500-people-employing, $5 billion gigafactory in Nevada, ending a five-state competition that pitted California, Arizona, New Mexico, and Texas against the eventual winner.

The news, which leaked yesterday in advance of a press conference this afternoon, shouldn't come as a huge shock. After all, Tesla CEO Elon Musk said back in the spring that the state's chances to land the battery factory were "improbable," even though Fremont already houses the electric car company's main factory. Tesla had started work on the site near Reno in July.

California had mounted a strong-enough last-minute bid that the news of Nevada's victory caught Senator Dianne Feinstein by surprise. At an event in Silicon Valley, she told CBS, “I’m sorry about that, but Nevada’s a good neighbor. We have a lot in common.”

As Forbes points out, Nevada was "always the best bet" in the five-state competition. The Nevada site is situated near sources of lithium, the material that Tesla uses to make the batteries. It also has a legal structure that makes it harder to tie up large development projects with lawsuits, something with which California often struggles. Arizona and Texas were always long shots, in part because of state laws that benefit conventional car dealerships and prohibit Tesla from selling cars at its stores there. Nevada is also a right-to-work state, which limits potential union activity.

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