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November 28, 2014

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A guide to Nevada’s big deal with Tesla, Elon Musk

Image

Paul Sakuma / AP

The front of a Tesla sports car at a showroom in Menlo Park, Calif., on Dec. 9, 2008.

News leaked out Wednesday that Nevada beat out four states to win Tesla's $5 billion lithium battery factory.

This afternoon, Gov. Brian Sandoval will confirm what everybody already knows, the high-end electric car maker will receive at least $400 million from Nevada to make batteries near Reno.

But before Tesla starts cranking out car batteries, there are lots of questions, few answers and a lot of political history. The deal has been years in the making, so here's a guide to the history, politics, connections, logistics and next steps behind the deal:

The history

In February, Tesla announced it would build a factory to make lithium ion batteries for its electric cars. Nevada threw its name in the hat and made the short list in June.

Tesla said it would invest in whatever state was willing to provide about 10 percent of the cost to build the factory. About 6,500 estimated jobs were on the line.

Nevada was the frontrunner from the outset but became embroiled in a bidding war with California, Arizona, Texas and New Mexico.

The politics

Sandoval has campaigned for economic development more than anything else in his first term. He's a regular at ribbon cuttings to promote job growth.

With 6,500 jobs, Tesla would mean a lot to a state still reeling from the recession with the nation's fourth-highest unemployment rate. Today, Sandoval will trumpet the Tesla deal while smiling for photos with Tesla officials and lawmakers.

But one face will be missing: Sen. Harry Reid's.

Reid will be in Las Vegas hosting his seventh Clean Energy Summit, a who’s who of politicians and playmakers in the nation’s energy industry.

Sandoval has long been rumored as a challenger to Reid in 2016. But the two often appear together at ribbon cuttings. A source close to Reid, who requested anonymity because the deal hadn't been officially announced, said the senator has been in on the Tesla talks.

Sandoval asked Reid to call Tesla CEO Elon Musk when the bidding war among the states got hairy. Musk and Reid have a history together. The CEO was a guest at Reid's energy summit two years ago.

“This doesn’t happen in a vacuum,” the source said.

The Legislature

Sandoval and legislators were mum Wednesday.

CNBC reported that a member of the governor’s staff confirmed the Tesla news, the first report of the deal. But for the rest of the day, Sandoval and lawmakers would only confirm today's press conference.

A source close to governor, who also requested anonymity, said Sandoval “looks forward to joining Tesla and legislators tomorrow.” And lawmakers and staffers in Las Vegas made last-minute travel plans to attend the press conference.

The key question: Will the Legislature call a special session next week to figure out how to come up with the state subsidies to close the deal with Tesla?

Sandoval had said in August that there wouldn't be a special session for Tesla. But a state lawmaker who requested anonymity confirmed that legislators will travel to Carson City for a session.

Legislative leaders weren't as forthcoming. “We've got to see what the details are and how it all plays out,” Assembly Speaker Marilyn Kirkpatrick said. “There is a lot to think about.”

One factor to watch in Carson City: Will Nevada's north-south divide drive the debate? The incentives would come from statewide funds, but the benefits would go largely to Northern Nevada.

New neighbors

Tesla will join Amazon and Apple as big-name players in Northern Nevada. The location is four hours from Silicon Valley and San Francisco. For Tesla, it’s even more convenient. The proposed site in Reno is four hours from its assembly plant in Fremont, Calif.

The bigger advantage for Tesla is its proximity to Silver Peak. The small mining town is 225 miles from Reno and home to a mine owned by Rockwood Lithium, the largest domestic producer of the mineral in the U.S.

Rockwood produces lithium for Panasonic, the company that makes the lithium ion for Tesla’s car batteries, and is in talks with Tesla to build facilities near the battery factory.

“We have a real interest in seeing the gigaplant in Nevada,” said Ken Levine, a spokesman for Rockwood.

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