Tuesday, February 20, 2007

Albuquerque Lands Deal With Tesla Motors for Electric Car Plant

By Andrew Webb
Journal Staff Writer
    SANTA FE— Tesla Motors made it official Monday: The California-based luxury electric automobile startup plans to build cars of the future at a new plant on Albuquerque's West Side.
    The San Carlos, Calif., company expects to eventually build 10,000 or more five-passenger, all-electric sedans here annually. The plant will employ up to 400 initially.
    The first of the sedans, code-named WhiteStar, is expected to roll off the assembly line as soon as 2009.
    The plant could later employ thousands as Tesla expands its model line.
    Gov. Bill Richardson made the announcement with Tesla CEO and co-founder Martin Eberhard and board Chairman Elon Musk, who founded Internet financial giant PayPal. They were joined by Sen. Jeff Bingaman, D-N.M., Albuquerque Mayor Martin Chávez and other government and business officials.
    Ultimately, the company will receive incentives totaling about $20 million, said Economic Development Secretary Rick Homans.
    Musk said the decision to build its plant in Albuquerque came down to the red-carpet treatment.
    "We just felt incredibly welcome across the board," he said.
    Richardson said the plant, to be built near the new Tempur-Pedic mattress factory at Interstate 40 and Paseo del Volcan, would be a welcome addition to the state's burgeoning alternative energy industries.
    "Tesla is committed to clean energy and so is New Mexico," he said.
    Chávez agreed.
    "This really fits us like a glove," he said.
    Bingaman called Tesla's technology "one of the kernels" that will help the nation reduce its dependence on foreign oil.
   
N.M. wins
    Monday's announcement ended two weeks of speculation as various states, including California, Michigan and Arizona, scrambled to put together incentive packages for Tesla's first manufacturing plant.
    The package was put together by nonprofit business recruiters Albuquerque Economic Development and the New Mexico Economic Development Partnership with help from various government agencies.
    The state will make two $3.5 million capital outlay appropriations, one this year and one next, to Bernalillo County, which will use the money to build infrastructure such as roads and other necessities at Tesla's planned Cordero Mesa location. Albuquerque will contribute $600,000 for infrastructure improvements.
    The plant will be built by Albuquerque-based Rio Real Estate Investment Opportunities and leased to Tesla, which plans to invest about $35 million in tooling and other equipment.
    SunCal Cos., which recently bought about 57,000 acres in the area, has committed to giving the company up to 75 acres next to its plant if it expands, Homans said.
    First Community Bank will provide some "extremely competitive" financing for the project, Homans said.
    Other incentives will include state tax credits for high-wage jobs, employee training reimbursements and a possible investment from state permanent funds. The State Investment Council, which has invested in other technology companies, said last week that it was considering an investment proposal for Tesla.
    And Richardson said he had directed the state to consider purchasing up to 100 of the cars over a two-year period.
   
'On the ground floor'
    Landing the plant in an era of declining manufacturing on U.S. shores was a coup.
    "From when I first took this job ... one of our goals has been to attract an auto assembly facility to New Mexico, and I think this fits the best we could have asked of any of them," Homans said.
    "It's next-generation, it's innovative, and we're getting ourselves in on the ground floor of a new technology in a new industry. This was our way in."
    Musk said the company considered a number of variables, including real estate costs, work force availability and other criteria.
    "New Mexico and Albuquerque turned out to be the clear winners," he said.
    Founded in 2003, Tesla has aimed to make electric cars that are fast and luxurious in hopes of changing the perception of such vehicles, which have never gained much traction in the U.S.
    "We've all seen electric cars come and go, and most of them looked like golf carts," Eberhard said. "If we expect people to get away from the cars we drive today, we have to give them a car they want to drive. We've changed the perception of what an electric car can be."
    Tesla is already testing prototypes of its first car, the $100,000 Tesla Roadster, and expects to begin selling them later this year. The Roadster, which has a range of 250 miles and zips from 0 to 60 mph in less than 4 seconds, will be built in England by Lotus, which collaborated on its design.
    The sedan, which will start at $50,000, will also have a range of 250 miles and will accelerate from 0 to 60 in about 6 seconds. That car, which Eberhard said is still in the "clay model" stage, is being designed at Tesla's recently opened design center in Michigan and will compete with luxury marques like BMW.
    Musk said plans are in the works to build a higher-volume $30,000 car, and rapid advances in battery technology mean the Tesla's range could be increased to 500 miles in less than a decade.
    "We expect thousands of jobs to be here in New Mexico, and many more vehicles besides the WhiteStar," he said.
    The cars are powered by lithium ion batteries— scaled-up versions of the same power sources found in laptop computers and other devices. Charging the battery for a 250-mile trip will cost $3, Eberhard said.
   
Tesla Motors proposals
    PLANT SIZE: 150,000 square feet
    JOBS: 400 at start
    GROUNDBREAKING: April 2007
    EQUIPMENT VALUE: $35 million
    WhiteStar sedan
    SEATING: five passengers
    POWER: all electric
    RANGE: 250 miles
    COST: $50,000 to $65,000
    VOLUME: 10,000 cars per year to start