Please ensure Javascript is enabled for purposes of website accessibility

Why Nevada Is the Frontrunner for the Tesla Motors Inc. Gigafactory

By Tamara Walsh - Apr 22, 2014 at 11:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Forget Texas, Nevada could now be the frontrunner for the Tesla Motors Gigafactory.

Four states are in the running for Tesla Motors (TSLA 4.53%) multibillion-dollar Gigafactory (link opens a PDF), including Arizona, Texas, New Mexico, and Nevada. As much as $5 billion dollars and 6,500 manufacturing jobs are at stake. It makes sense, then, that Tesla is using this massive factory as an opportunity to help convince states like Texas and Arizona to allow the electric-car maker to sell its vehicles directly to consumers in those states. As it stands, Tesla's direct sales model is currently banned in Texas and Arizona.

Texas is a particularly important state for Tesla because it is the second largest and most populous state in the United States. Down the road, it would be hard for the company to achieve its goal of selling 500,000 zero-emissions cars annually without being able to sell its vehicles in Texas. However, despite the obvious benefits for a Tesla Motors plant in Texas, it seems that Nevada could now be the frontrunner in this $5 billion arms race.

Why Nevada?
In an interview with Bloomberg, Matt Hardigree of says Nevada is most likely in the lead for Tesla's planned lithium-ion-battery factory. As Hardigree points out, Nevada has a railroad line that connects directly to Tesla's Fremont, Cali., assembly plant. This could play a critical role in the final decision because, ultimately, Tesla will need to transport hundreds of thousands of heavy batteries from the Gigafactory to its assembly plant in California.

Another reason that Nevada seems to make the most sense these days is because the state is rich with lithium pools -- one of the key elements Tesla needs to make its battery cells. In fact, Nevada is the only state in North America with a lithium producing mine today. Lithium demand in this country is growing at breakneck speed, with demand for industry-grade lithium expected to top 320,000 tons by 2020, up from just 102,000 tons in 2010.

These two factors, together with the fact that Nevada is home to the world's largest solar power plant, could make it the new home of Tesla's Gigafactory. Making its massive battery factory both green and self-sustainable to as great an extent as possible is a priority for Tesla. Moreover, the company's chief executive, Elon Musk has already said the plant will be solar and wind powered. While Texas would be a better location for wind power, the arid conditions in Nevada make it ideal for solar power generation.

Source: Tesla Motors

From its direct rail line and lithium mines to the state's sun-filled landscape, Nevada looks like the ideal place for Tesla Motors to build its massive Gigafactory today. Moreover, Tesla needs to make a decision soon if it plans to begin construction on the factory before year's end.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$737.12 (4.53%) $31.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.