Has California Lost Its Chance For Tesla's Gigafactory?

Talks continue between California Gov. Jerry Brown's administration and Tesla. (Photo credit: Wikipedia)

The state of California wasn't included in Tesla Motors' original list of four Southwestern states that were finalists to land its $5 billion gigafactory. But after officials appealed to CEO Elon Musk for the opportunity to make their case, he agreed to let California into the race.

However, California lawmakers are not about to be rushed. They adjourned their 2013-2014 session on Saturday, without taking action on legislation that would have brought Tesla incentives up for a vote.

That's because there were no terms between the state and California to insert into the bill, according to the Associated Press.

The delay could mean that Tesla's aggressive timetable for the gigafactory is thrown off, if it decides to wait for its home state. Conversely, California may once again find itself off Tesla's list of semi-finalists.

Musk has insisted that the winning state have all its ducks in a row before Tesla grants it the gigafactory, which is expected to create 6,500 jobs and produce battery packs for future Tesla electric cars. That means a cleared production site, state and local incentives, and all necessary permits.

Tesla actually had given the impression it would name its finalists by now, aiming to come up with a winner by the end of the year. But, the only state to become an official finalist is Nevada, where the bed for a Tesla production site stands ready outside Reno.

That left Texas, New Mexico, Arizona and California to come up with their competing offers.

In recent days, there have been questions in the competing states over whether Tesla is asking too much from them. The base price to land the factory is $500 million, which is 10 percent of the overall $5 billion cost.

Advocacy groups sent an open letter to the states last week, saying they had been 'pitted in a race to the bottom, from which no real winner may emerge.'

Tesla officials justify that amount by pointing out the number of jobs that are set to be created, and the fact that other states have paid proportionally more to attract new factories. None of the states has yet pulled out of negotiations with the carmaker, which have taken place primarily in secret. But, beyond Nevada, there has not been public progress in any of the other places.

Meanwhile, California officials say they continue to talk to Tesla.

On Friday, when it looked like the legislation would fail to come up, Mike Rossi, a senior advisor to Gov. Jerry Brown, issued a statement, saying, 'The administration continues to engage in productive conversations with Tesla and remains optimistic that we can reach an agreement that meets our common goal of adding jobs in California.'

A key issue in California has been the required environmental permits. The lengthy amount of time required to arrange them was seen as a reason why California wasn't included in the finalist group in the first place.

Despite its original aggressive timetable, Tesla has moved more slowly than it indicated it would on the gigafactory, perhaps as a courtesy to California, home to its headquarters and its assembly plant in Fremont.

Tesla had planned to announce one of its finalists in June, another in July and perhaps a third by now. It explained its push for multiple preparation projects as necessary to keep the gigafactory on track. However, California lawmakers aren't scheduled to meet again until December. In that time, Musk could reach deals with other states, allowing Tesla a choice of production beds and incentive plans.

The next months will show whether California has lost its last-second chance, or can come up with a bid that keeps it in the gigafactory race.

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