Tesla to NM: Hasta la vista, baby
Electric car company reneges on Albuquerque for plant, choosing Bay Area
ALBUQUERQUE -- A California electric car company that had promised to invest $35 million in a manufacturing plant on Albuquerque’s West Side and provide 400 high-tech jobs apparently found the grass greener in its home state. Tesla Motors announced today it would bypass Albuquerque and instead manufacture its electric sedans in the San Francisco Bay area — leaving a group of developers here out nearly $300,000.
“We will be doing this in the Bay Area to keep better control over production,” said Tesla Chairman Elon Musk, in an e-mail to the San Francisco Business Times. “One of the mistakes that Tesla made early on was being too spread out around the world.”
New Mexico officials brushed off the news and their own disappointment. Fred Mondragon, secretary of the state Department of Economic Development and one of the key negotiators in the effort to attract Tesla to Albuquerque, said the news came out of the blue, but was not a total shock. The company had gone through a corporate shakeup in December, booting its founder and chief executive officer, Martin Eberhard, off the board of directors and out of the executive management group.
“Considering all their issues of corporate management, in some ways it’s not a surprise,” Mondragon said of today’s announcement. “But it’s still unfortunate they backed away from their commitment to the state.”
Gov. Bill Richardson had nothing to say about the broken deal, a spokeswoman said, leaving the official state announcement to the Economic Development Department.
Also mum was Albuquerque Mayor Martin Chavez, who had welcomed Tesla into the city’s growing family of green-collar industry when it announced plans to settle in Albuquerque in February 2007. Spokeswoman Deborah James said Chavez was disappointed, but that he has alluded to other high-tech firms coming to the city in the near future.
“We will be doing this in the Bay Area to keep better control over production,” said Tesla Chairman Elon Musk, in an e-mail to the San Francisco Business Times. “One of the mistakes that Tesla made early on was being too spread out around the world.”
New Mexico officials brushed off the news and their own disappointment. Fred Mondragon, secretary of the state Department of Economic Development and one of the key negotiators in the effort to attract Tesla to Albuquerque, said the news came out of the blue, but was not a total shock. The company had gone through a corporate shakeup in December, booting its founder and chief executive officer, Martin Eberhard, off the board of directors and out of the executive management group.
“Considering all their issues of corporate management, in some ways it’s not a surprise,” Mondragon said of today’s announcement. “But it’s still unfortunate they backed away from their commitment to the state.”
Gov. Bill Richardson had nothing to say about the broken deal, a spokeswoman said, leaving the official state announcement to the Economic Development Department.
Also mum was Albuquerque Mayor Martin Chavez, who had welcomed Tesla into the city’s growing family of green-collar industry when it announced plans to settle in Albuquerque in February 2007. Spokeswoman Deborah James said Chavez was disappointed, but that he has alluded to other high-tech firms coming to the city in the near future.
In contrast, Richardson, Chavez, Mondragon and other officials were all smiles 17 months ago when Tesla said it would locate on the West Side. The company, under Eberhard’s direction at the time, would site its $35 million WhiteStar sedan manufacturing plant at Cordero Mesa business park, they said, bringing 400 jobs along with the cachet of one of the world’s first all-electric sedans.
At the time, Tesla was struggling to get its $100,000-plus electric roadster ready for mass production in England, but company officials promised that the New Mexico plant was right around the corner. In his announcement, Richardson said: “Construction on the 150,000-square-foot plant will begin in April 2007, at the latest.”
In exchange, the state would provide about $7 million in capital costs over two years to prepare the West Side for the plant, Richardson said, as well as the usual range of economic incentives: high wage job tax credit, the manufacturer’s investment tax credit and assistance from the Job Training Incentive Program.
Meantime, a group of Albuquerque developers jumped into high gear and began paving the way for Tesla to start work, said Tim Cummins, a Bernalillo County commissioner and real estate agent. The group, West Side Economic Development, put nearly $300,000 into designing a manufacturing plant, he said, because Tesla maintained it was coming.
Despite the company’s management and engineering difficulties, Cummins said, “They kept recommitting to the project and the site.” Even after the corporate shakeup last fall, Tesla officials said the developers should keep working.
“But from about March (2008) on, we had a feeling it was over,” Cummins said. Aside from the corporate issues, the company was wrestling with technological problems in its batteries and transmissions, he said. “We even had discussions (with the state) about withdrawing the proposal,” because the company hadn’t done anything for more than a year.
Today’s announcement, therefore, didn’t come as a total surprise, Cummins said. “I’m surprised it took them so long to decide what to do, but I can’t say I’m surprised by their decision.”
California Gov. Arnold Schwarzenegger said today that Tesla would receive a broad array of incentives — far more than offered by New Mexico, it appears. The biggest incentive is that the state will finance an estimated $100 million worth of manufacturing equipment, which Tesla will then lease back.
New Mexico officials said Tesla’s decision is not much of a setback. Schott Solar just announced plans to hire 1,500 people and invest $100 million in a plant; Hewlett-Packard is relocating to Rio Rancho and creating 1,300 jobs; and Fidelity Investments is bringing 1,250 workers when it opens here.
Said Mondragon, “Nobody is going to go out and shoot themselves because Tesla isn’t coming.”
But Tesla may not have heard the last from Albuquerque. Cummins said that he and his partners are talking over their options for recouping their $300,000 investment in the car company. “Now that they’re definitely not coming, we’re going to have some serious discussions,” he said.
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© 2008 The New Mexico Independent
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Posted 07/01/2008 22:44 with
Action was taken by the Water Utility Authority to construct lines for water and sewer service to serve Tesla Motors, a condition it demanded. (WUA R-07-18 – Authorizing an Agreement with Westland DevCo for Water and Sanitary Sewer Service to Serve the Westland Master, adopted August 22, 2007)
The Resolution passed on a 5-2 vote. Councilor Cadigan, who voted against it along with Councilor Benton, argued that extending water and sewer out that far violated the principles of the WUA and would promote sprawl.
Now that Tesla Motors won’t be coming, the action loses its initial legitimacy. Can the Resolution be withdrawn and the process go back to what it was before, as laid out in the various planning documents? To do anything else would show the true colors of the initial action.
By the way, the vote was taken at the same meeting as Dr. Gutzler made a presentation on the impacts to water supplies due to climate change. One message was that surface water supplies may be reduced by 20% by mid-century. We know we use more than is renewed, so increasing uses sure seems irresponsible.