Tesla Motors strikes deal with San Jose

September 17, 2008 6:49:53 PM PDT
The first new California car manufacturing plant built in the past 40 years will call the Silicon Valley home. Tesla Motors made it official Wednesday that San Jose will be their new home. They will be bringing the city 1,000 new jobs by 2012 as workers crank out 20,000 green cars a year. The proposed facility is on Zanker Road, just off Highway 237.

San Jose's mayor and Tesla Motor's CEO have forged a clean tech, high impact economic deal. The electric car company will build a $250 million headquarters and manufacturing facility in North San Jose.

"We will enhance the image of San Jose, bring lots of employment and clearly for Telsa, it is also good," says Ze'ev Drori, President and CEO of Tesla.

Good because of a deal Governor Schwarzenegger orchestrated in June. The state will spend $100 million for manufacturing equipment and lease it back to the company. And there's a $9 million tax break if Tesla then buys the equipment.

"It is another indication that California is not seeding manufacturing to any other state or any other nation," says Victoria Bradshaw, California Secretary of Labor.

Mayor Chuck Reed aggressively went after Telsa, offering up an 89-acre site in North San Jose. The city put together a 40-year land lease, with the first 10 years being rent free. After that, Tesla will pay at least $1.5 million a year.

The city expects the economic benefits to far exceed its investment.

"The notion that we could get a company that would have $2 billion of impact on our local economy and create a thousand jobs, on a piece of land that we are making zero at this moment. I think that's a good deal for the city," says Paul Krutko, Chief development officer.

Governor Schwarzenegger actually has one of the roadster models, which cost $109,000. The all-electric, four-door model that will be manufactured on this site will run about $60,000.

San Jose has promised to fast track permits and environmental reports. The goal is to have luxury sedans rolling off the assembly line by the end of 2010.

"It is a bold step by the city of San Jose, but in these tough economic times, you have to take a bold step to keep the economy moving, keep these jobs coming into San Jose and keep us moving so that we can lead the nation out of this recession," says Mayor Chuck Reed.

With much of the economy in the red, Mayor Reed says Tesla represents green in more ways than one.

For more on this, check out Karina's Back Story.


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