Tesla Homes In on Austin, Texas, for Cybertruck Plant Site

(Bloomberg) -- Tesla Inc. is zeroing in on an area in southeast Austin, Texas, for the electric-car maker’s second U.S. auto factory and first pickup plant.

The company has filed an application with an Austin-area school district in Travis County seeking a tax abatement, according to publicly filed documents. Elon Musk, Tesla’s chief executive officer, announced in March the Silicon Valley-based carmaker has begun scouting for sites to produce its Cybertruck, which is still in development, and Model Y crossover for customers on the East Coast.

“Tesla is evaluating the possible development, design, and construction of an electric-vehicle manufacturing plant in Travis County,” the company said in the filing. The 2,100 acre site under consideration is currently a ready mix concrete facility owned by Martin Marietta Materials Inc.

Construction is proposed to start in the third quarter of this year pending all required approvals. Oklahoma remains in contention for the factory, according to the filing, and Musk tweeted on Thursday that Tesla had not yet bought the land in Texas.

Tesla’s proposed 4 million to 5 million-square-foot plant would eventually employ 5,000 workers and become its fourth worldwide for vehicle assembly. The company bought its first factory in Fremont, California, from Toyota Motor Corp. in the wake of the global financial crisis for just $42 million. It started making Model 3 sedans on the outskirts of Shanghai early this year and is planning to begin output of vehicles near Berlin next year.

‘Critical’ Abatement

Tesla said eight states were initially identified as viable contenders and that it has received incentive package offers, without giving specifics. It has since narrowed the search and said its ability to win a school tax abatement from the Del Valle Independent School District will weigh heavily on its plant location decision.

“This is especially critical in Texas due to the high level of real and personal property taxes relative to other states,” the company said.

Oklahoma Commerce Secretary Sean Kouplen said Thursday that the city of Tulsa is still a finalist and that the state has put forward a “responsible performance-based incentives package” to attract Tesla.

“We believe Oklahoma would be the right choice for Tesla,” Kouplen said in a statement. “We’re centrally located, we’re a pro-business state, our Automotive Engineer Workforce Tax Credit will benefit both Tesla and the engineers that they recruit and our amazing quality of life is a huge plus.”

Controversial Program

The proposed deal with the Texas school district makes use of a state tax program that allows districts to grant breaks to economic-development projects. The state then repays the district.

The program “has been very controversial,” Nate Jensen, a government professor at the University of Texas-Austin, said in a phone interview. “There have been a lot of scandals around incentivizing companies that were coming anyway.”

Tesla unveiled its Cybertruck prototype in November, with Musk pitching it as a radically different take on the type of vehicles Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV count on for much of their profits. The demonstration of what were supposed to be shatterproof glass windows on the vehicle didn’t go as planned but went viral, generating enormous publicity.

Master Plan

Musk’s declaration that Tesla would build the plant prompted a chorus of offers from cities and states across the country hoping to land the project. The move was reminiscent of the company’s 2014 announcement that it planned to build a massive battery factory. The carmaker chose Nevada after the state offered $1.3 billion in incentives.

The search for the Cybertruck plant began before Musk threatened to move Tesla’s headquarters and future programs to Texas or Nevada after a California county blocked the carmaker from reopening its Fremont factory in the midst of the coronavirus pandemic. Days after his outburst, the company defied county health officials and restarted production.

The planned Cybertruck plant would fulfill a long-held ambition of Musk. In his 2016 “Master Plan, Part Deux” blog post, the CEO wrote that Tesla’s lineup eventually would “cover the major forms of terrestrial transport,” including pickups.

©2020 Bloomberg L.P.