Tesla targets Reno (and others) for Gigafactory

Tesla battery battle

Give Tesla CEO Elon Musk credit, he's playing a strong hand when it comes to picking the location of a highly coveted battery plant.

After months of considering several sites in five states as possible locations for Tesla's new $5 billion Gigafactory, the electric car maker has made it clear one city appears to be out in front of others for landing the battery plant.

Reno, Nevada is that city.

"We've essentially completed creating the construction pad for the Gigafactory in Nevada," Musk told analysts during a conference call after posting second quarter earnings.

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The announcement was not surprising since pictures surfaced earlier this week of bulldozers and earth movers working at an industrial park south of Reno. The Reno Gazette-Journal says the area being cleared is part of the Tahoe-Reno Industrial Center which has 30,000 acres still available for development. Being located near Interstate 80, just a few hours down the road from Tesla's final assembly plant in Fremont, California, the potential site makes perfect sense.

But there's a catch: Tesla says Reno is one of several possible locations for the Gigafactory. The key word there being "possible".

"Before we actually go to the next stage of pouring a lot of concrete, we want to make sure we get things sorted out at the state level, that the incentives are there that make sense for the state and for Tesla," said Musk.

With that, Musk made it clear Tesla is still driving for the best deal possible with political leaders in Nevada.

A Model S is parked in front of a new Tesla Supercharger outside the Tesla factory in Fremont, Calif.
Getty Images

"At this point the ball is in the court of the Governor and the state legislature," he said.

The message is clear for not only Nevada, but also for California, Arizona, New Mexico, and Texas which are also lobbying for a massive battery plant that could bring up to 6,500 jobs: Bring your best tax and incentive package as soon as possible because we're ready to break ground.

In fact, Tesla wants the state (or states) where the Gigafactory is located to kick in 10 percent of the $5 billion it will cost to build the battery plant.

"Tesla is not going to go for a deal that is unfair for the state or unfair for Tesla, we want to make sure it's compelling for all parties," said Musk.

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So Tesla is still considering at least one or two other states for the Gigafactory and the company plans to break ground in those states just as it has outside of Reno.

"It makes sense to have multiple states going in parallel," he said.

He's right from this stand point. Tesla has the leverage right now to get the best deal possible from several cities and states that are hungry to land a major jobs project. Add in the fact that these will be well-paying manufacturing jobs that straddle the auto and energy industries and you see why state leaders want the Gigafactory. In Nevada, they can already see where those jobs would be based.

Of course, Nevada and the other states still need to close the deal.

—By CNBC's Phil LeBeau

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