Tesla details employment, investment plans for gigafactory
- October 24, 2014
- Posted by: Jennifer
- Category: News
Electric car maker submits formal application for incentives to state of Nevada
Tesla Motors revealed a few more details about its gigafactory on Wednesday, including a breakdown of its employment and investment plans, as it formally submitted its application for incentives to the state of Nevada.
Tesla CEO Elon Musk downplayed the importance of incentives during the gigafactory announcement in Carson City in September, citing “speed to development” as the primary reason Nevada was chosen for the project.
In its application, however, Tesla says the $1.3 billion incentive package offered by the state played a “significant role” in the decision to locate the gigafactory in Nevada.
Although factors such as workforce, a suitable project site and logistics certainly were key factors, “without the availability of the abatements and incentives offered by the State of Nevada and Storey County, the State would not have been a competitive option for … the Project,” Tesla said in its request for incentives.
Incentives negotiated by the state with Tesla include $195 million in transferable tax credits plus abatements in sales and use taxes, real and personal property taxes as well as taxes on wages paid.
Details about jobs
Although Tesla requested confidentiality for certain information related to its plans, the application provided additional details regarding its employment and investment plans for the gigafactory.
The application confirmed that the plant will employ 6,500 full-time employees but raised its average wage estimate to $26.16 per hour. Tesla expects to employ 300 workers during the first year of the project, growing that to 2,000 workers by the third year and 4,000 workers by the fifth year. Tesla plans to have 6,500 employees by its eighth year. Initial projections had the gigafactory being fully operational by 2017.
Staffing for the battery plant will include:
• 4,550 production associates paid $22.79 per hour
• 200 material handlers paid $22.79 per hour
• 460 equipment technicians paid $27.88 per hour
• 360 quality technicians paid $27.88 per hour
• 930 engineers and senior staff paid $41.83 per hour.
Wages paid by Tesla for the gigafactory will total $353.6 million per year at full employment The figure does not include construction employment.
What will it cost to build the gigafactory?
Tesla also provided a more detailed breakdown of the $5 billion in capital investments it will make on the facility through 2028. The cost for the building and site infrastructure will be $1.1 billion. Machinery and equipment will account for the remaining $3.9 billion, including materials processing and product assembly.
Once the 5.5 million-square-foot facility reaches full operation, it will produce enough batteries for 500,000 Tesla electric cars each year. Although the number is significantly less compared to major auto manufacturers — Toyota and General Motors sold nearly 10 million units each last year — it represents a big leap for Tesla.
The company is projecting 35,000 sales of its electric cars worldwide this year. Musk says an affordable mass-produced car is key to the future of Tesla, which is fighting an ongoing battle with auto dealerships in several states as it ramps up plans for its less pricey Model 3 car.
In addition to making batteries for its cars, Tesla also expects the gigafactory to produce products for other automotive manufacturers and suppliers as well as electric utilities and power generation and storage companies. Tesla, for example, recently finished a joint electric drivetrain project with Mercedes Benz parent company Daimler AG and also produced the batteries for Daimler’s electric Smart car.
In requesting incentives from Nevada, Tesla reiterated its estimate of more than $100 billion in economic impact for the state. These include impact from an international consortium of partners and suppliers as well as a boosts in advanced manufacturing and logistics operations. The gigafactory, which requires a large amount of lithium, also could expand existing mining operations and encourage the development of new ones, Tesla added.
Tesla’s application included letters of support from entities such as Storey County, the city of Reno and the Economic Development Authority of Western Nevada.
“As a result of Tesla’s announcement to relocate to Northern Nevada, we have seen an increase in businesses evaluating relocation to our community over the past month,” said Reno mayor Bob Cashell.
Pat Whitten, Storey County manager, also downplayed criticism of Tesla’s record-breaking incentive deal. The Tesla deal dwarfs the previous record — $89 million for Apple’s data center east of Sparks.
“While some may see abated revenues as lost revenue, that is a short-sighted outlook,” Whitten said. “The Tesla project has served as a catalyst that is already driving in additional inquiries and transactions from other companies.”