A coalition of government watchdog groups is urging states to stand firm against Tesla Motors' demand for millions of dollars in incentives to win its so-called "Gigafactory" — a $5 billion facility that will supply all the batteries for the company's electric vehicles.
The plant, which Tesla says will employ some 6,500 people when it is complete in 2020, is one of the most sought-after economic development trophies in years. But the activists call the competition "a race to the bottom from which no real winner may emerge."
The comments came in an open letter to officials in California, Nevada, Texas, New Mexico and Arizona—the five states vying for the Gigafactory—from watchdog groups in each state as well as from Good Jobs First, a Washington DC-based non-profit group that tracks government subsidies to business.
"It is time to break the harmful pattern of one state 'winning' a high-profile competition, with other states left believing they need to offer even larger tax breaks to win future deals," the letter says.
In a conference call last month on Tesla's second-quarter results, co-founder and CEO Elon Musk said he expects the winning state to put up roughly ten percent of the plant's cost, or around $500 million. It was that figure — which equals about one-fifth of Nevada's fiscal 2014 budget for K-12 education — that sparked the activists' campaign.
"If Tesla is going to run a public auction, let's make it a public auction," said Good Jobs First Executive Director Greg LeRoy in an interview.
The letter demands that any deal to win the Tesla plant be "fully transparent."
"No law requires you to negotiate with Tesla or any other company behind closed doors," the letter says.
But so far at least, none of the states appears willing to take the groups' advice. Officials in all five states have either not responded to requests for a comment, or have declined to discuss the letter, some citing confidentiality requirements by Tesla.