Despite incentives, Tesla stiffs CA

Despite incentives, Tesla stiffs CA

Tesla Model S wikimediaEnsnared by deep contradictions between its regulations and priorities, California officials failed to close a massive deal with automaker Tesla, allowing Nevada to ink a landmark agreement.

California and Nevada were just two of the states vying for Tesla’s $5 billion “gigafactory,” where the company will produce the lithium-ion batteries that power its electric cars. Arizona, New Mexico and Texas had also hoped to lure Elon Musk’s marquee business within their jurisdiction.

All five states considered by Tesla had advanced in competition with a mix of incentives, subsidies and regulatory exemptions that attracted criticism from the left and the right of the political spectrum. But California’s effort inspired perhaps the greatest vitriol. Anti-corporate environmentalists decried legislators’ unprecedented willingness to fast-track extraordinary carve-outs for Tesla from the state’s notoriously cumbersome environmental regulations.

At the same time, pro-business Republicans bridled at the possibility that California — Tesla’s home state — could be beaten out by other Western states, especially Texas. Under Gov. Rick Perry’s leadership, Texas has made a point of poaching companies from California — part of a political PR campaign that underscores the differences in economic growth brought on by different economic policies.

Paying the price

Caught between a rock and a hard place, legislators rushed to cobble together a package of promises that would at least keep California in the running for Tesla. Adding insult to injury, California had not even wound up on the initial shortlist for the fashionable firm, according to the San Francisco Chronicle.

“One of California’s biggest hurdles,” reported the Chronicle, “was the state’s extensive environmental review process, which often takes years for big construction projects. Musk explicitly pointed to that issue when discussing Gigafactory plans, saying it made the state an ‘improbable’ location. In response, California officials discussed finding ways to speed up the process, something they did last year for Sacramento’s basketball arena.”

Even earlier, Sacramento had offered exemptions from the California Environmental Quality Act to two National Football League stadiums. According to The Californian, those concessions helped set a precedent for the Tesla push — but deepened feelings, among influential opponents of the deal, that legislators were simply picking and choosing winners.

Layers of paradox built up over years of California politics had made the struggle to woo Tesla too complex to be carried out swiftly. Tesla’s unique product, meanwhile, cut across too many conflicting interest groups. As The Californian observed, Gov. Jerry Brown had campaigned in 2010 in part on reforming CEQA, but failed to move the ball in Sacramento. Tesla’s zero-emissions cars, meanwhile, tempted legislators with environmentalist sympathies to give the firm a way to skirt environmental laws beloved of activists.

Election-year fodder

Faced with the state’s inability to surmount these contradictions, some Republicans have claimed vindication in their attacks on Democrats, who have dominated the state’s policymaking for years. In the year’s only gubernatorial debate, Republican candidate Neel Kashkari slammed Brown for allowing Tesla to slip through California’s fingers. “I don’t think Governor Brown did nearly enough on Tesla or any number of businesses,” he said.

Kashkari’s criticism squares well with longstanding GOP criticism of complex regulation, overprotective environmental rules and other obstacles to free markets and new business creation. This election year, however, the influence of Tea Party conservatives and resurgent libertarians has altered the traditional pro-business campaign calculus for Republicans across the country — and California is not immune.

Careful observers have cautioned that Nevada’s victory in the Tesla sweepstakes comes at a substantial cost. Not only are the up-front expenses substantial — over $1 billion to Nevada taxpayers. What’s more, even if the so-called investment pays off, as Nevada Gov. Brian Sandoval insists it will, some analysts suggest the costs to economic freedom and economic health posed by the crony-capitalist aspects of the deal will be more painful, if harder to quantify.

6 comments

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  1. Dancquill
    Dancquill 10 September, 2014, 07:52

    The SF Chronical says “One of California’s biggest hurdles,” reported the Chronicle, “was the state’s extensive environmental review process, which often takes years for big construction projects. Musk explicitly pointed to that issue when discussing Gigafactory plans, saying it made the state an ‘improbable’ location. In response, California officials discussed finding ways to speed up the process, something they did last year for Sacramento’s basketball arena.” What the Chronical forgets to point out is that ONLY government crony socialist projects get the royal treatment. California loves great big make work and spend taxpayer dollars like so much waste paper.. Just as long as private sector efforts are not so granted favor.

    Reply this comment
  2. Queeg
    Queeg 10 September, 2014, 08:52

    You were star struck. She was the cutest gal. Wined and dined her, movies, plays, candy and flowers.

    She acted so distant, detached at times, but…but so appreciative too..a peck here and there on the cheek, a squeeze of the hand.

    Then all of sudden….

    She was gone!

    It had to be momma’s fault-

    Reply this comment
  3. californianative
    californianative 10 September, 2014, 10:14

    Just this morning to pick my mother up in her new middle class neighborhood ( she left the People’s Republic of California last year and brought her money with her) in the Research Triangle of NC. Low and behold a nice new black, sleek Tesla driving into the neighborhood! This is about the 5th one I’ve seen out here. So Green! Of course, most of our electricity comes from coal fired plants. We are laundering coal into ” clean energy”!! LOL. Beat that Kommiefornia!!

    Reply this comment
  4. Bill Gore
    Bill Gore 10 September, 2014, 17:09

    I’ll go slow: Tesla is a business. As a business it needs to be profitable to STAY in business. It is NOT in business to spend 15 years environmental navel gazing, or fending off constant lawsuits, or submitting to platoons of governmental goons demanding to inspect, regulate, subpeona…..

    And the sublime irony is that their product is so clean, green and progressive that it is mind-blowing..

    Also, in Nevada they are closer to their lithium deposits, no need to have raw materials crossing state lines into CA (God knows what kind of regulatory onslaught THAT would trigger.).

    JUST SAYIN” 😉

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 10 September, 2014, 23:19

    Billie

    Local/State enviro inspectors and their attorneys love to sniff around commercial and industrial properties looking for mini brown fields.

    If you sell or refi, change insurers, or get new tenants skittish lenders and/or insurers may ask for assurances the property is “clean”.

    Whatever that ends up meaning- Ugh

    Reply this comment
  6. Ian Random
    Ian Random 15 September, 2014, 04:43

    Texas isn’t quite as cheap as people like to think, just look at the property taxes, but the processes do move a lot faster there. The delay to make money must kill smaller businesses with high capital requirements and large bank payments. The inspector thing is how Hugh Hewitt, the radio guy, supplements his income by fighting those sudden discoveries. Google Clark Foam to see how easy the regulatory environment was for him.

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