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Austin: Tesla Wants Incentives to Build Auto Assembly Complex

Featured Illustration (above): Tesla’s Gigafactory is currently under construction outside Reno, Nevada. The maker of electric automobiles and sustainable energy products is looking at sites in southeast Travis County and in Oklahoma to build its next U.S. manufacturing facility. Image: Tesla

Posted: 6-23-20

By Edmond Ortiz

Austin (Travis County)Tesla is asking Travis County for economic development incentives to help support construction of a 4-million to 5-million-square-foot auto manufacturing facility in the southeastern part of the county.

And this may just be the beginning of the California company’s investment in Texas.

The automaker and sustainable energy product developer proposes $1 billion in construction and outfitting of the electric vehicle manufacturing plant on 100 acres at Texas Highway 130 and Harold Green Road.

The plant will be located inside the 2,100-acre Austin Green property, which Momark Development plans to turn into a mixed-use, master-planned development.

Located northeast of Austin-Bergstrom International Airport, the site is currently a sand and gravel mining quarry and concrete plant owned and run by Martin Marietta.

The red outlines the Austin Green redevelopment site, which would include the proposed site for Tesla’s next assembly plant. Image: Travis County

Tesla’s representatives on June 23 virtually briefed Travis County Commissioners Court about the proposed plant, where the company will manufacture its existing Model Y SUV and its planned Cybertruck.

Company representatives have indicated that, if the project gains approvals from the county and Austin, construction could start late this summer and last two to three years. No construction delivery method has been announced.

The county hired Jon Hockenyos with TXP Inc., a local consulting firm, to explore the potential fiscal impacts that a Tesla assembly plant could have on the county and Austin area.

Using a freshly minted special purpose entity as its affiliate, Colorado River Project LLC, Tesla proposes creating 5,000 new jobs at the assembly plant.

The workforce will have an average annual salary of $47,147 and full benefits, including a monthly $130 allowance for employees who commute a long distance.

Sixty-five percent of the workforce would consist of unskilled labor. Tesla said they are open to forming partnerships with local colleges and workforce development groups to fill many of those positions.

Tesla plans to manufacture a SUV version of its Model Y at its next proposed U.S. assembly plant. Image: Tesla

Preliminary findings show that the Tesla plant could generate more than $600 million in annual sales activity, and spark the creation of more than 4,000 secondary jobs, such as suppliers and vendors.

The property in question has an estimated taxable value of $5.59 billion over 10 years. Under the proposed agreement, Tesla would receive $14.6 million in property tax rebates and pay $21.6 million in property taxes to the county during the same time frame. The county would collect $7 million in net tax revenue over the same number of years.

Del Valle Independent School District (DVISD) is considering tax breaks to help support Tesla’s project. Tesla said it is not seeking incentives from the city of Austin.

Tesla’s plant would be the lone auto manufacturing complex in Central Texas. It would also become a major new economic generator, leading to the creation of new businesses and/or the expansion and relocation of existing firms, all focusing on advanced transportation and sustainable energy.

Additionally, Tesla has been touting other potential community benefits, such as working with the county to develop affordable housing projects in the area, and working with Capital Metro to expand public transit to the plant site.

Tesla’s planned Cybertruck would be manufactured at the company’s proposed assembly plant. A site southeast of Austin is under consideration. Image: Tesla

Tesla and its majority shareholder, Elon Musk, took to social media to publicize their search for another location to expand the company’s production capabilities.

Tesla representatives said additional capacity in existing and new products shows a need for increased manufacturing capacity in the United States.

An Austin-area plant, Tesla representatives have said, would provide vehicles to the Eastern United States.

“Numerous studies have been performed to identify the best location and eight states were initially identified as viable contenders for the new factory throughout the central part of the United States,” the company stated to commissioners June 23.

The current focus is on Oklahoma and Texas as potential locations for the new facility. The Travis County location within Del Valle’s district was selected because it meets the project criteria, the company added.

Company representatives also cited the current rate of economic growth in Central Texas, the local concentration of skilled workers, and the relative low costs of doing business in Texas as other reasons for proposing an assembly plant near Austin.

Tesla owns and operates a former General Motors facility in Fremont, California, and is currently working towards completing what it calls the Gigafactory near Reno, Nevada.

The Gigafactory is poised to become the world’s largest building with a footprint of 5.8 million square feet. Tesla also operates an assembly plant in Shanghai, and is building a factory in Berlin.

Automated assembly at Tesla’s Fremont, California plant. This plant is a converted former General Motors facility. Image: Tesla

News of Tesla’s plan to build a production complex near Austin has generated speculation that the company might be looking to relocate its headquarters to Texas.

Musk in May used Twitter to express frustration about restrictions that the state of California placed on businesses because of the COVID-19 pandemic.

“Frankly, this is the final straw,” Musk had Tweeted. “Tesla will now move its HQ and future programs to Texas/Nevada immediately.”

The Fremont, California plant had briefly shut down until Tesla and Alameda County, California reached an understanding on reopening the facility with safety measures.

According to county staff, Tesla’s proposed Austin-area plant and agreement has received support from numerous local political leaders, business organizations and manufacturing advocates.

More than 40 people called into the virtual presentation. Many lauded Tesla’s proposal, but others expressed concerns about the proposed incentives, and the environmental effects of construction and factory operations.


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By |2020-06-23T17:13:29-05:00June 23rd, 2020|Construction Preview, Feature Story|

About the Author:

Edmond Ortiz is a lifelong San Antonian and a 20-plus-year veteran in local journalism, He previously worked full-time at the San Antonio Express-News, and has been freelancing for outlets such as the Rivard Report.

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