Tesla factory investment, hiring lag state projections

By Daniel Rothberg

Wednesday, Feb. 3, 2016 | 2:52 p.m.

Tesla increased the workforce and capital investment at its 5.5 million-square-foot Northern Nevada battery factory in the last quarter of 2015, according to a report this week from the Governor’s Office of Economic Development.

But those additions were not enough to close the gap between actual spending on Tesla’s Gigafactory and projections by the state.

Tesla broke ground on the battery plant in 2014. After a special session of the Nevada Legislature in September that year, Tesla received more than $1.3 billion in tax incentives. The factory already has started producing Powerwall batteries, which store solar energy.

By the end of last year, the factory, which is being built with Panasonic, had 272 full-time employees between the companies, a nearly 200-employee gain from the third quarter.

The California electric car and energy storage company also invested $78 million in the factory in the fourth quarter, nearly $30 million more than what it spent in the previous quarter.

That brings the total investment in the Gigafactory to $310 million and hiring to 272 permanent employees. A state economic impact analysis, prepared by Applied Economics in September 2014, predicted investment in 2015 to be about $1 billion and hiring to be at 700 employees.

The Governor’s Office of Economic Development, however, argues the analysis does not provide an accurate timeline for investment projections because it assumed all construction would take place at once.

"In its application to the state for abatements, the company refined its annual job creation projections to more accurately reflect that the construction of the (Tesla) Gigafactory would be completed in phases instead of all at once as the state’s economic impact report initially projected,” said Jennifer Cooper, a spokeswoman for the office.

Under Nevada law, to qualify for the tax incentives, Tesla must make a minimum investment of $3.5 billion over 10 years. The Tesla Gigafactory is expected to cost about $5 billion.

And more investment is likely on the way. In early January, the Wall Street Journal reported that Japanese electronics company Panasonic will spend up to $1.6 billion on the factory.