I don’t even have a car, but I have a soft spot for the folks at Tesla Motors. They’re doing some really cool things with electric car batteries and solar. They melted my cold heart when they reopened the Nummi plant in Fremont, Calif. I’m someone whose entire family was once employed by some aspect of the auto industry. When Nummi became Tesla, it felt like a happy ending to some of the most boneheaded maneuvers that General Motors ever pulled.
But when California state Sen. Ted Gaines (R) announced, last Friday, that California is offering to exempt Tesla Motors from many of the state’s environmental regulations if the company builds its proposed $5 billion, 6,500-job-creating lithium ion battery factory (a.k.a. the Gigafactory), it became clear: Tesla may make green technology, but California might give it a pass on building green factories.
The offer is still being worked out by the governor’s office, so it’s not certain if this will be part of the final deal. Previously, exemptions to the California Environmental Quality Act (CEQA) have been granted to things like stadiums, not factories. The offer itself is part of a five-way race between Arizona, New Mexico, California, Nevada, and Texas to prove who loves Tesla the most — and it’s gotten a little loopy. Gaines stopped by Tesla’s headquarters in Palo Alto to drop off a golden shovel. Texas Gov. Rick Perry — who doesn’t even believe that humans are causing climate change — has been seen cruising around Sacramento in a Tesla Model S.
Nevada is already believed to be the winner of this competition. The state has no corporate income tax, as well as the only active lithium mine in the country. Tesla started construction outside of Reno last month, but Elon Musk, Tesla’s CEO, told investors that “it makes sense to have multiple things going in parallel” and that the company was still working out its incentive package with the state and hadn’t made a final decision.
By making it a five-way race, Tesla is upping the ante for tax breaks, but also smoothing away inconvenient state laws. Because Tesla sells directly to consumers, instead of through dealerships, selling its products is more or less illegal in several states, including Arizona and Texas (would-be buyers get around the ban by ordering them over the internet). But despite the money that auto dealerships have poured into keeping laws in Texas the way they are, Perry is now supporting HB 3351, a bill that would undo the state’s ban on direct-to-consumer automobile sales. If it passes, Tesla buyers would qualify for the state’s electronic vehicle rebate plan — another recent development.
It’s hard to see events like this come to pass and not come away with the feeling that a factory is magic. Imagine what could happen if a big solar panel plant announced that it was considering moving to Texas — the state’s hostility to the technology might instantly transmute into job-creational boosterism.
The tax breaks that Tesla has pulled down are epic — the argument has been made that the company would not be profitable without them. The Department of Energy gave Tesla a $465 million loan back in 2009 (the company has since paid it back) and the state of California gave Tesla an estimated $20 million in tax breaks to get the Nummi plant going, and $34 million more when the company decided to expand production.
It’s also true that said tax breaks are pretty par for the course in American business right now. Whether or not this is the way the world should work, if we’re going to subsidize products, at least we should be funding those that can put less carbon into the atmosphere rather than those that create more.
As green manufacturing expert Kate Gordon said when I interviewed her earlier this year, “If you’re going to have this environmental transformation that we’re all talking about, you have to make a bunch of stuff. … How do you get manufacturing with you instead of constantly having the National Association of Manufacturing say ‘No’ to everything? How do you make this an American competitiveness issue?” Handing out money is one way, to be sure.
Whether we should be waiving environmental standards, though, is another thing entirely. Lithium ion batteries don’t appear to have any glaring environmental flaws, but Silicon Valley is also home to several Superfund sites that were created by the semiconductor industry — a technology that was thought of as clean, until we realized it wasn’t. So: tax breaks, sure. But be careful with the water.
