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batteries

No gigafactory for Texas

They’re going to Nevada.

Nevada Gov. Brian Sandoval announced Thursday that Tesla Motors will build a massive battery factory in the state as long as legislators approve tax breaks and other incentives worth up to $1.3 billion over 20 years.

Sandoval revealed terms of the deal he negotiated with the electric car maker at a Capitol news conference attended by Elon Musk, CEO of California-based Tesla. The governor called it a “monumental announcement that will change Nevada forever.”

Sandoval didn’t mention the total value of the package and his remarks seemed intended to pre-empt critics who will see it as too generous.

“Is this agreement good for us?” the governor asked. “This agreement meets the test, by far.”

Later, he said that for every $1 Nevada gives up, the project will produce $80 in economic impact.

“Even the most skeptical economist would conclude that this is a strong return (on investment) for us,” Sandoval said.

Musk told the audience that Nevada didn’t offer the biggest incentive package among the five states that tried to lure the factory, though he didn’t specify which did among California, Texas, Arizona, New Mexico and Nevada.

The most important considerations were not incentives, he said, but rather a high confidence that the factory will be ready by 2017, followed by assurances that batteries can be produced cost efficiently.

Later, Musk told reporters that Tesla would stop looking for another state as a backup, in case Nevada did not come through. “Nevada is it,” he said.

Well, I’m a bit skeptical of that 80-to-1 return claim, but I’m not an economist, so there you go. Texas was in the running for this, but there was a big obstacle in the way.

Despite the state’s advantages, the company had indicated that Texas’ long-standing state laws protecting auto dealerships – a challenge to Tesla’s business model – did not help the state’s case. Texas laws prevent car manufacturers from selling directly to Texas consumers, as Tesla does. Texas requires manufacturers to sell their cars through tightly regulated franchised dealers. A few other states restrict Tesla sales through franchise laws, but Nevada is not one of them.

I’ve blogged about that before. I wonder if this will have an effect on the effort to change that law in 2015. Because of this, Texas was thought to not be a serious contender for the gigafactory. I won’t claim to be a big fan of the money that was being thrown at Tesla by the competing states, but there’s no reason to keep that archaic setup for auto sales. The Rivard Report, the LA Times, and Think Progress have more.

Tesla’s stealth visit to San Antonio

May mean something, or it may not.

A pair of executives from Tesla Motors Inc., the electric carmaker that’s scouting a location for its planned $5 billion “gigafactory,” secretly met here Wednesday with top city and county officials, a person close to the discussion said.

The meeting came less than a week after the San Antonio Economic Development Foundation submitted a proposal to the Palo Alto, Calif.-based manufacturer for the factory, which will produce lithium-ion batteries for Tesla vehicles and battery storage units for use in homes, commercial sites and utilities.

While details of what local officials offered Tesla weren’t available, the proposal included a separate section for CPS Energy, positioning the city-owned utility as a potential partner for the company.

“It appears San Antonio is back in the game for the project,” the source said, acknowledging the city’s chances had seemed to be remote — until recently.

[…]

A Tesla plant, which the company wants producing battery packs within three years, would need between 500 and 1,000 acres with 10 million square feet of production space. The factory would create 6,500 jobs.

The company has said that with its partners, it plans to produce 500,000 lithium-ion batteries annually by 2020.

Late Tuesday, Castro used Twitter and Facebook to stake out his position on a state law that prohibits Tesla from selling its all-electric vehicles directly to Texas customers.

“Today, Tesla is prohibited from selling its cars directly to consumers in Texas. State law requires that they be sold through a dealer. I respect our state’s auto dealers, but that law ought to change,” Castro wrote on Facebook. “That’s like telling Apple it can’t sell its products at an Apple Store but has to sell them through Best Buy or Walmart instead. Makes no sense.”

In a Wednesday interview, he said he agreed with Gov. Rick Perry that the law should be changed. Lucy Nashed, a spokeswoman for the governor’s office, confirmed Perry has no plans to call a special session to address the issue.

It’s unclear whether that’s a deal breaker for Tesla. Arizona lawmakers currently are deliberating changes there that would allow Tesla to circumvent dealerships and sell directly to the public.

See here for the background. I will note that even if Perry called a special session to address this issue there’s no guarantee a bill would pass. The Texas Automobile Dealers Association pushed back pretty hard on this during the last legislative session, and they surely won’t go away any time soon.

Chances are excellent that Red McCombs could get Gov. Rick Perry on the phone.

So I asked the San Antonio billionaire last week if he’d called the governor about safeguarding the state law requiring automakers to sell their vehicles through franchised dealerships, the bedrock of McCombs’ empire.

[…]

As one of the state’s biggest auto dealers, McCombs has a dog in this fight, and he’s a big-time Perry supporter. Just since 2008, he’s written checks totaling at least $302,500 to Perry’s gubernatorial and presidential campaigns.

So the question about calling Perry didn’t seem weird. But it did turn out to be awkward, for me anyway.

A couple of long seconds of silence on McCombs’ end of the phone line.

Then the 86-year-old answered in a low rumble: “No … Why would I?”

In other words, he saw no need. In fact, earlier in the interview, McCombs had talked about the franchise law as immutable.

“That is as set in stone as it can be,” he said. “It’s as sacred as Paul’s letter to the Corinthians.”

[…]

Even with the tantalizing prospect of the gigafactory, [Rep. Lyle] Larson thinks a measure allowing Tesla to make direct sales in Texas would fail once again.

“I do not see the chance for an option allowing Tesla to sell direct,” he said. “I don’t see any appetite for it.”

Yeah, you could say that. Unlike the microbreweries, my go-to analogy for Tesla, the number of people that have used Tesla products is very small, basically negligible in comparison to the existing players. I just don’t think they have the lobbying muscle or the grassroots support just yet to overcome the resistance they’re going to get from TADA and the many people who will be naturally sympathetic to the status quo. I absolutely think it will happen eventually, but it will take time and outreach on their part to familiarize people with what they’re asking and why it’s a good thing. The battery plant story is a great start, but that’s all it is. Besides, as Jalopnik notes, the proposed factory Tesla wants to build is itself no sure thing. Assuming it is, Tesla is going to have to decide where to build that factory without any assurances from Texas that the laws about selling cars will be changed. There just isn’t the time for it.

Tesla and Texas

Tesla Motors currently can’t sell its cars in Texas via its preferred model of direct sales to consumers. Its attempts to modify state laws to allow for direct sales went nowhere last session, blocked by fierce opposition from the Texas Automobile Dealers Association. They’re now looking for a place to build their new batteries. Why would they choose to do that in Texas given all that?

Now, those restrictions, which rank among the country’s strictest, could harm Texas’ chances of landing the $5 billion lithium-ion battery plant Tesla plans to construct by 2017.

In late February, the company announced that Texas was one of four states — along with Arizona, Nevada and New Mexico — in the running to house the wind- and solar-powered “gigafactory,” which Tesla says would span as many as 1,000 acres and employ about 6,500 people.

[…]

Tesla officials, however, have indicated that Texas’ tough restrictions on the company’s sales do not help the state’s case.

Alexis Georgeson, a company spokeswoman, said she could not specifically address how Tesla would weigh various factors in its selection process, but she said comments from Diarmuid O’Connell, Tesla’s vice president of business development, properly sum up Tesla’s view of Texas’ restrictions.

“The issue of where we do business is in some ways inextricably linked to where we sell our cars,” O’Connell told Bloomberg this month. “If Texas wants to reconsider its position on Tesla selling directly in Texas, it certainly couldn’t hurt.”

Texas laws prevent car manufacturers from selling directly to Texas consumers, and they require manufacturers to sell their cars through tightly regulated franchised dealers.

[…]

Tesla currently showcases vehicles at “galleries” in Austin and Houston, but state law prohibits employees from discussing the price or any logistical aspect of acquiring the car. That means prospective buyers in Texas must order the car from Tesla’s headquarters in Palo Alto, Calif. The cars are then delivered in a truck with no company markings, per Texas law, and customers even have to unwrap their new automobiles themselves, because the law prohibits Tesla’s in-state representatives from doing, saying or touching anything related to selling or delivering cars.

“It’s incredibly inconvenient,” Georgeson said. “Really what they are doing is making it tougher for customers.”

See here, here, and here for the background. I drew an analogy to microbreweries and their multi-session fight to get antiquated beer distribution laws changed. I still think that’s an apt comparison, but if it takes Tesla as long as it took the microbrewers to achieve their goal, it’ll be well past the time Tesla intends to have that factory up and running before they succeed. My guess is that they’d like some assurance of a quicker resolution before they’d be willing to commit to building here. To his credit, Rick Perry supported HB3351, the bill that would have done the overhaul Tesla wanted. Wendy Davis did not say she would support such a bill in 2015 – I seriously doubt she’d veto it if it passed on her watch – though she supported the general idea. Greg Abbott typically had nothing to say. So we’ll want to keep an eye on what individual legislators and candidates are saying. My guess is that Tesla is in for a fight that will take more than one more session to resolve. Whether that affects their decision about where to put that battery gigafactory remains to be seen.

Green batteries

This is very cool.

Robert Conrad approves

In one more step of a global effort to develop greener battery technology, researchers at Rice University say they have found a way to replace a costly metallic component in lithium-ion batteries with material from a common plant.

While many of today’s lithium-ion batteries incorporate cobalt, which has to be mined and then altered at high temperature for use in batteries, Rice researchers say they can accomplish the same function using a dye extracted from a plant.

Reaching into an oxygen-free box to combine and assemble materials, researchers have shown that in altered form the plant-based substance can be incorporated into a lithium-ion battery that is almost as effective as today’s versions, said Leela Mohana Reddy, the lead researcher in the effort.

The chemically altered dye can hold and move the energy-carrying lithium ion in the same way as lithium compounds involving cobalt or other substances. The material was derived from a small flowering plant called a madder, native to southern Europe and the Mediterranean region. Scientists are testing other dyes that could prove even more effective, Reddy said. His group’s findings appeared last month in Nature’s online journal Scientific Reports.

Although the science behind the green battery component is in its early stages, if developed further it could lead to a change in one of three main battery parts: the cathode. Simply changing that component would increase the sustainability of battery production, Reddy said.

“You don’t have to do any mining,” he said. “You just plant and then you can turn it into a dye and then into a battery material with simple chemistry at room temperature.”

Batteries, especially rechargeable batteries, will be increasingly important as we move – however slowly – towards less dependence on oil. We also know that less dependence on metals that need to be recycled is a good thing as well. It’s great to see some of the leading research on this new technology be done at Rice. If we’re really lucky, some hot new startup will emerge from this research. And if nothing else, this story gave me the opportunity to post this little blast from the past:

Go ahead, I dare you.