"PatBateman" (PatBateman)
03/18/2014 at 13:18 • Filed to: Tesla
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"PatBateman" (PatBateman)
03/18/2014 at 13:18 • Filed to: Tesla | 5
| 34 |
Lately, there has been a lot of chatter regarding Tesla and their bid to open their battery manufacturing plant, or "Gigafactory", somewhere in the US. Jalopnik writer and Son of Texas Patrick George earlier wrote of the "hypocrisy" his home state is spinning by banning sales of the Model S within its borders all the while asking for them to locate said factory in the Lone Star State (there is a little hypocrisy, but read on). I'm here to tell you that it might make PERFECT business sense by Mr. Musk to make batteries in Texas.
Allow me to hit a few bullet points to back up my personal thoughts:
Better Business Environment
Texas gives about $19 Billion in tax incentives to businesses each year. Many tech companies, such as Facebook, eBay, and Apple, have all decided to take advantage of those concessions and bring jobs to Texas. How much are we talking about, money-wise, per company? When Samsung brought their business to the Austin area a few years ago, they got $231 Million in incentives. Also, Virgina and Texas have been going back and forth being Forbes' number one state to do business in. This is why.
Employee Living Standards
I'm guessing that the factory would be located near a large city, so this would limit the locations to San Antonio/Austin, Dallas, or Houston (and Lubbock, per Mr. George). No, I haven't forgotten about El Paso. The cost of living in these areas is EXTREMELY low compared to other areas of the US. They will get the most bang for their buck, all without a state income tax.
Ease of Supply Chain Management
Elon and crew won't be making half a million cars anytime soon. So why is he planning on making half a million batteries? That's right: TO SELL TO OTHER AUTO MANUFACTURERS!!! With it's plethora of rail lines (for domestic sales) and having the Port of Houston, which is the busiest shipping port in the US, close by (for international sales), Texas makes a damn good argument for itself.
Tesla Cars For Sale in Texas?!
Let me ask you something: do you think that Texas Lawmakers would be A LOT more likely to approve limited direct sales by Tesla to consumers if Tesla opened their battery plant there? You bet they would. There are about 26 million people living in Texas, or about 8% of the nation's population. The state is a MAJOR market for all auto manufacturers. If putting the Gigafactory there would open up the market on top of all the other goodies Tesla would get, why wouldn't they?
Why Texas NEEDS The Gigafactory:
Texas has been trying to bring in different kinds of businesses into its open land, but they need to ensure that they are well-diversified away from Energy. Underneath the Texas soil holds about 3-4 times the oil that Syria has. The wells won't go dry anytime soon, but they must plan for it. The oil bust of the 1980s is still remembered, and they must protect against a future reoccurrence.
Love it or hate it, there are damn good reasons why Elon Musk should consider Texas for his Gigafactory thingamajig. There are pros and cons to every state that is vying for their business, but this would be a great way for Tesla to turn an adversary into a strong ally.
Keep the comments nice, people.
Patrick George
> PatBateman
03/18/2014 at 13:26 |
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I agree 100 percent that Texas would be a good fit for the Gigafactory. ( They're looking at Lubbock , by the way.) I hope my story didn't come off as saying it shouldn't. I'd like to see my home state get the jobs and tax revenue. Plus, SpaceX is already there. At the same token, I understand where Tesla is coming from, not wanting to locate the factory in a state where the laws have been hostile to their model of sales.
Can Texas' politicians put aside car dealer interests to do what's right for the state as a whole? I wish I knew the answer to that. As some commenters have suggested, the industries that stand to benefit from the Gigafactory — construction, tech-related businesses, etc. — could drown out the car dealers' voices on this one.
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PatBateman
> Patrick George
03/18/2014 at 13:32 |
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I wouldn't say you came off as disliking Texas. I just wanted to clarify a few points on why Tesla shouldn't hold grudges in business.
As someone who has worked in the Texas Legislature, I can definitively say that Tesla WOULD have a very very good chance of getting an exception through the governing bodies.
EL_ULY
> PatBateman
03/18/2014 at 13:40 |
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There are some here in town that say "LOLGAS" "WATTFUN, and another that I cant remember. You make so many good points dude. PG and MH, Front Page this!!!
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PatBateman
> EL_ULY
03/18/2014 at 13:42 |
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I like funny license plates on these cars. Keep it light-hearted, I say. :)
Illegal Machine
> PatBateman
03/18/2014 at 14:11 |
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Seeing as Texas is so business friendly, and contains the energy capital of the US (and quite possibly the world), I'd think he'd drop it in Houston. Seems like a no-brainer.
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PatBateman
> Illegal Machine
03/18/2014 at 14:29 |
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I would think so too, but it wouldn't be difficult to slap it in the other cities. The railways would make for simple transit around the state.
Patrick George said that one of the locations they were looking at was Lubbock. I'm not sure WHY they would consider Lubbock. I would put Houston at the top of the list, then Dallas, then San Antonio/Austin (I lump those two together because the corridor between the two would make a great choice ).
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Illegal Machine
> PatBateman
03/18/2014 at 14:40 |
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Lubbock...maybe for the wind farms (*edit* just read the article, looks like it's for the wind farms)? No idea. It's a terrible place.
Everyone in Houston knows someone who works in energy. I work for an energy generation company. The misnomer is that it's all oil out there. If it's energy generation of any sort, we do it here in Houston.
TheRegent
> PatBateman
03/18/2014 at 19:14 |
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It is a good idea. A comparative point is the location of DeLorean in Houston. I had the opportunity to ask the president why he moved the company here. His reasons (in no particular order) were: '1. Middle of the country (roughly equidistant from each coast). 2. International Port and nearby rail lines. 3. It never snows, so 100% uptime 4. Cost of living and 5. business environment.'
Take the inevitable Anti-DeLorean and Anti-Texan flames out of the conversation, and it's a valid reason for locating businesses.
Austin has been raking in the tech business, (and they're building automotive tooling factories in north austin), but anywhere along the Dal/Aus/San line runs I-35 (Mexico-Chicago) a rail line and a major internet trunk. It's not a bad place. Also, Tacos.
jalop1991
> PatBateman
03/20/2014 at 21:03 |
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It's all just numbers, and Musk is a handy numbers guy. If he puts it in Texas, you can bet it'll be because that's what makes overall sense.
It'll be funny watching the Texas pols guffaw over it if this happens, not realizing how they've ultimately been taken. It's like buying a new car: if he let you out the door with the car at that price, you automatically lost. There was a lower price to be had. In this case, Musk would be the salesman and Texas would be the buyer.
victor
> PatBateman
03/20/2014 at 21:12 |
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As a supply chain professional, i find your arguments interesting. As an alternative to China (low cost manufacturing hub), I can see the draw.
But just like Apple's South Carolina and Reno Data Centers, it's all about low cost relatively low wage "grunt" workers, getting those tax incentives, and nothing about bringing high skill long term economic growth. The draw of California is that there's a lot of high-wage/high-skill jobs there, which brings people in. The people here create a critical mass of bringing more companies here when they need the high-skill workforce.
Samsung might have a semiconductor plant (which is a very dirty operation) in Austin with some Engineers, but the architects and EECS people all sit in California and Seoul.
In the same way, Tesla might set up a factory there, but all the jobs that matter are still in Palo Alto and Fremont.
People bitch about the Silicon Valley and the cost of living, but most still ultimately won't "maroon" themselves into career islands in non-tech markets.
If that's the game that Texas wants to play, then good for them.
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PatBateman
> victor
03/20/2014 at 21:31 |
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I think you'd be surprised at the kinds and caliber of jobs available in Texas. Relocating Tesla's HQ isn't on the table, just well-paying jobs for their plant. Jobs that would be happily taken by many here.
Outside of assembly workers, there would be quality control, managers, HR, clerical, Supply Chain management (I was vice president of my college's Supply Chain Management club myself), PR, and assembly mechanic jobs as well. Most of those would probably pay high five/low six figure salaries, plus benefits/retirement. That money can get you pretty far here.
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PatBateman
> jalop1991
03/20/2014 at 21:32 |
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Just curious, but how would they have been "taken"?
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PatBateman
> TheRegent
03/20/2014 at 21:40 |
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Mostly tacos. With chorizo.
Quick story: 1.5 years ago, my wife and I went to Chicago for a Texans-Bears game. The hotel we were staying at had a very upscale tapas restaurant in it, so we ate there for lunch as soon as we checked in. The waiter tried to get me to order the chorizo soup by making it sound sexy as hell ("Chorrrrrrizoooo is an exotic sausage made in the heart of Central America and is extremely succulent..."). Finally, I told him that I was from Texas and that I ate chorizo for breakfast (true story). He relented and gave me the beer cheese soup I had originally asked for.
Tacos.
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PatBateman
> EL_ULY
03/20/2014 at 21:56 |
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Caught this one while I was driving back from a lunch appointment today. It says "SPARKI".
germancarsonly
> PatBateman
03/20/2014 at 22:18 |
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I know my state isn't included on the published list of locations, but California is Tesla's home. California has lots of sunny desert and that is something they want. Don't be surprised if Jerry Brown doesn't make Mr. Musk an offer that is hard to turn down.
Sorry, Tesla stores don't have a chance in Texas. www.notgoingtohappen.com . Many Texas auto dealers also have oil interests. The Texas Auto Dealers Association is the ultimate good ol' boys network and they buy their politicians big time in Texas.
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jalop1991
> PatBateman
03/20/2014 at 22:20 |
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just in general, if Tesla puts a big factory there then it's no doubt because Tesla gets more out of that arrangement than do the idiot Texas legislators.
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PatBateman
> germancarsonly
03/20/2014 at 22:52 |
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First of all, this is Texas. EVERYONE has oil interests. Oil stock, pipeline leasing, oil leases, a large part of our economy... A few thousand cars won't put a dent in demand for oil. However, it WILL increase demand for natural gas-burning power plants to create electricity. Guess who has a lot of natural gas in addition to oil?
As someone who has actually worked in the Texas Senate, I can tell you that there is a very good chance that Tesla gets a pass to sell their vehicles up to a certain volume. Especially if they put the Gigafactory in Texas. To say that dealerships have some kind of hold on the legislature is a little absurd.
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EL_ULY
> PatBateman
03/20/2014 at 22:55 |
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lol, i've seen that one by Nasa Rd. 1. awesome
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PatBateman
> jalop1991
03/20/2014 at 22:59 |
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Okay, let's rewind. I have known quite a few Texas legislators. I wouldn't say that any of them are idiots. They might have differing views, but they are not mental midgets.
Also, you really think that they're offering deals that are detrimental to the state? They offer tax incentives for job creation. Those jobs help flourish our economy, which I'll remind you is one of the top state economies in the nation.
Basically, using your analogy, the buyer is purchasing the car from the salesman, and the salesman then goes to the buyer's business and spends most of what he made off the sale.
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PatBateman
> EL_ULY
03/20/2014 at 23:00 |
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He must have the long range battery. That was taken in Sugar Land.
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EL_ULY
> PatBateman
03/20/2014 at 23:04 |
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It was at like a pool supply store by a hobby lobby. I didn't think it'd be a problem to go from Sugarland to 45 south in a Model S.
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PatBateman
> EL_ULY
03/20/2014 at 23:07 |
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Depends on traffic, weather, other stops, etc. Let's face it: Houston traffic is a bugger for a Model S running dangerously low on juice.
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EL_ULY
> PatBateman
03/20/2014 at 23:09 |
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Lol that's true
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jalop1991
> PatBateman
03/20/2014 at 23:10 |
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It may not be that the Texas pols are mental midgets; however, I guarantee that they appear to be when placed next to Elon Musk. It's all relative.
If Elon Musk hands you a dollar, be aware that he gets far more out of that than you do.
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PatBateman
> jalop1991
03/20/2014 at 23:13 |
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Elon Musk is a genius, and we'd all look dumb next to him. Giving incentives in Texas is a negotiation where everyone wins. Texas doesn't collect as much tax dollars from the plant, but they do from the workers in the form of Ad Valorem and an increase in economic transactions that they wouldn't have gotten if they hadn't given the incentive in the first place.
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jalop1991
> PatBateman
03/20/2014 at 23:37 |
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I wonder about that "everyone wins" bit. My guess is that Musk would arrange things such that the Texas pols think they won, and it may appear so in the short term on the surface...but we all know how well politicians are at dealing with futures. In that game, Musk will win every time while the pols are left dealing with the "unintended" (to them) consequences of their actions.
aglawyer
> jalop1991
03/21/2014 at 05:43 |
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You're looking at this as a two-party negotiation between Elon/Tesla and Texas, and in that light, with the theology one side always wins/one side always loses, you would be right. But you're wrong on both points: (1) It's actually a negotiation between multiple parties- Elon/Tesla, Texas, and every other state interested in a Gigafactory. Texas wins the factory, in a perfect world, if it only beats those other contenders. If the other guys offer little to no incentives, and Texas offers just a few, then Texas gets the factory for little cost. And (2), it's not a zero-sum game with a winner and a loser. What qualifies as a win, for each party, is so different as to create a situation where both Elon/Tesla AND Texas can win. In this scenario, Texas could offer to forego several million in potential tax revenues, which it would not realize if the factory wasn't built in any case, incentivizing Tesla to build as they would be realizing a major tax benefit they could not get anywhere else, but Texas would still benefit, in the end, in the form of 100s-1000s of newly well-paid Gigafactory employees buying houses, paying property taxes (which realizes about $6000 a year/employee/$300K house owned) and buying necessary goods in TX (which realizes upwards of $3500/year in sales tax revenue), not to mention any other economic benefit to Texas resulting from becoming the largest producing State of Li-ion batteries.
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TheRegent
> PatBateman
03/21/2014 at 12:10 |
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Hahahaha! Probably a good choice, as I'm not sure what would pass for chorizo up there.
To be fair, I've not yet found a true chicago dog in Austin, but then again I've not been looking. ;)
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PatBateman
> TheRegent
03/21/2014 at 12:29 |
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James Coney Island's Chicago style sausage dog is about as close as you're going to get to the real thing in Austin. My in-laws are from the south side of Chicago, and he swears they aren't the same, but I honestly couldn't tell the difference.
But I'm a Texan. BBQ and Tex Mex are my culinary bags. Hot dogs, not so much.
chromecarz00
> germancarsonly
03/21/2014 at 12:44 |
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Taxes.
crazysaturn
> PatBateman
03/24/2014 at 20:08 |
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Heh, you just need to get out of the loop and you'll find some amazing latin food. If you're ever in town again head to Pilsen or Humboldt park and rejoice.
Reigntastic
> PatBateman
03/27/2014 at 12:27 |
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If anybody is going to successfully snag another business deal, it'll be Perry. I hated how he carried himself during his presidential campaign, but honestly the guy is a pretty great governor. He understands economics fairly well, and our economy is awesome because of it. I grew up in Plano, I've seen firsthand just how much attention our business climate can bring. Dr. Pepper, Snapple, McAfee, HP(Formerly EDS), FedEx, Alcatel, Frito-lay, and Capital One all have offices in Plano, and that's just to name a few.
Cost of living is fantastic here too. I like the idea of going elsewhere on paper, but I am situated really well here. Economic opportunities are great, and I get to keep more of my money than pretty much anywhere else in the country. House values are good but not overinflated, and the education system here is some of the best in the country. It doesn't make sense at all for me to want to move.
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PatBateman
> Reigntastic
03/27/2014 at 12:37 |
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I've encountered several people from other states that assume Texas is only good for low wage blue collar job creation. The exact opposite is true. I'm down in Houston. Care to go see all those low-earning doctors and nurses at the Med Center? How about meeting a bunch of minimum wage energy executives? Or those lowly engineers that are scattered all over town? Hell, a rig worker can make over $100k/year only working 6 months out of the year.
We have it good in Texas. People in other areas might not realize it, but we do.
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Reigntastic
> PatBateman
03/27/2014 at 12:39 |
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I'm perfectly happy letting them not realize it for now. All I need to do is consistently snag some property and get a business going, and I'm set.