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October 24, 2014

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What you need to know this morning about Nevada’s deal with Tesla

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Steve Marcus

Elon Musk, chairman and CEO of Tesla Motors, speaks during the National Clean Energy Summit 5.0 at the Bellagio on Tuesday, Aug. 7, 2012.

It’s the biggest economic news for Nevada since the 2008 recession.

Tesla will build a $5 billion lithium ion battery factory in Northern Nevada. In exchange, the high-end electric car maker will receive at least $400 million from Nevada.

Gov. Brian Sandoval will announce the deal this afternoon in Carson City, where the state legislature is expected to convene as early as next week to review the incentive package.

Here’s everything you need to know about the deal and what it means for Nevada:

How we got here

The Sun’s Kyle Roerink breaks down the background to the politics, logistics and business of Tesla deal, plus what’s next.

The Reno-Gazette Journal has a timeline of Nevada’s courtship of Tesla. It’s clear things moved quickly from February to September

Why Northern Nevada

Despite having little experience in auto manufacturing, Nevada is the Goldilocks of locations for Tesla, writes Forbes contributor Mark Rogowsky.

Nevada’s Tahoe Reno Industrial Center is four hours by way of I-80 to Tesla’s plant in Fremont, Calif. It’s also about three hours away from America’s only active lithium plant. Lithium is a key ingredient in Tesla’s batteries, and Nevada has a lot of it. Jason Hidalgo of the Reno-Gazette Journal has a deep dive on the future of lithium production in Nevada and beyond.

Tesla’s massive Northern Nevada plant is expected to produce more than all of the lithium-ion currently made in the world today, according to the The Wall Street Journal.

Storey County has also positioned itself economically to let Tesla grow. It’s perfected the ability to speed through building permits to attract facilities for big companies like Wal-Mart, Apple and Amazon.com, writes Reno-Gazette Journal’s Anjeanette Damon.

And why now

Tesla has almost single-handedly driven the electric vehicle industry forward, wrote PVTech in 2012. And its CEO, Elon Musk, is envisioning a world where cars are powered by the sun.

He spoke at Sen. Harry Reid’s Clean Energy Summit in 2012 on the idea, saying: “I feel strongly that solar power will be the single largest source of sustainable energy in terms of power productions that humans consumes.”

Musk and Reid share a passion for developing Nevada’s solar energy capacity. Musk is also chairman of SolarCity, a company that’s expanding in Henderson to offer solar panels to homeowners. At Sandoval’s request, Reid made phone calls to Musk when the bidding wars for Tesla’s factory grew tense, reports Kyle Roerink.

The same day the Tesla news is being announced, Reid hosted the seventh annual Clean Energy Summit, where the Nevada Democrat said Tesla was drawn to Nevada’s growing clean energy industry.

The jobs

Tesla's plant is expected to produce about 6,500 jobs. But how will those jobs break down among the assembly line, engineers and executives? And will they be filled by Nevada residents or by California migrants?

One expert suggested the jobs would spilt into three types: Manufacturing workers with a high school education, middle managers/manufacturing professionals and high-end executive and accounting positions, as the Reno-Gazette Journal reported in June.

The politics of it all

As four states — California, Texas, New Mexico and Arizona — tried to outdo Nevada for the Tesla factory, Musk maintained all along the winner would have to give Tesla $500 million in tax incentives.

That deal is likely the largest package for any American auto maker, ever, points out The Wall Street Journal.

There’s been some grumblings already from the right and the left on the merits of the deal, especially at a time when Nevada’s schools are struggling.

“Why would lawmakers want to take from poor and middle-class families to subsidize a billionaire making cars for millionaires?” asks of the right-leaning Nevada Policy Research Institute in the Reno-Gazette Journal.

Not to mention a special session to approve the deal will cost taxpayers $25,000 to $40,000 a day.

News on the deal is developing all day Thursday. We’ll keep you updated on everything you need to know.

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