Long Beach vies to lure new Tesla factory away from Downey

Electric car maker Tesla Motors is still deciding where to locate its more than $300 million assembly plant for its Model S sedan. Given that the site selected will get about $20 million in extra tax and utility revenue, in addition to as many as 1,500 jobs, the competition is getting pretty fierce.
Two weeks ago, the city council in Downey, Calif. approved a deal with the Industrial Realty Group to make it easier for Tesla to move onto an 80-acre tract of land in town. As part of the agreement, Downey said it would pay IRG $8.7 million to solidify the choice. But now the city of Long Beach, Calif. has just one-upped that offer.
The Long Beach city council has just approved a proposal to give Tesla $28.6 million in financial incentives if it decides to locate the Model S factory there. The city has long been on the car maker’s short list of potential sites, particularly because it is home to an old Boeing factory that could be converted.
The Downey property also has its advantages in this area. Right now, it is home to a movie and television production studio, but it was formerly used by Rockwell International and Boeing for spacecraft assembly.
So far, the company has remained mum on its decision making process. With $365 million in government loans earmarked for the facility, it’s not necessarily looking for the cheapest option — $28.6 million just isn’t that much in comparison. How fast the facilities can be converted to churn out sedans could be a major factor. Tesla wants them rolling off the assembly line by the end of 2011 — a deadline that the whole industry will be watching, no doubt.
The fact that Long Beach is continuing the bidding war does cast some doubt on statements made by Downey mayor Mario Guerra, who said that the deal to bring Tesla to the city was nearly a done deal. If this was truly the case, why would Long Beach still be attempted to lure the EV maker away? A last ditch effort perhaps?
Regardless if the company chooses Long Beach or Downey, the plant’s construction will mark the return of the automotive industry to Southern California for the first time since General Motors closed its last factory there in 1992. Separated by only 17.7 miles (a 20 minute drive), the two cities share the same neighbors. Workers in nearby Compton, Lakewood and Cerritos will also benefit no matter which one is selected.
Tesla has been in the news a lot in the past few days. It just hired away senior Google human resources specialist Arnnon Geshuri to strategically onboard engineers and other employees. Overseeing recruitment at the search giant, he helped grow the company from 2,500 to 20,000 in five years. Tesla currently employs 500, and is looking to expand quickly with the development of its second, hotly-anticipated vehicle.
And just today, the company pulled the Model S out of the Progressive Automotive X-Prize competition, stating that it would rather perfect the car for its commercial release in 2011. It sounds like Tesla doesn’t want it getting too much media exposure before all the kinks are worked out.
The Automotive X-Prize, run by the X-Prize Foundation, will award $10 million to the team that develops a production-ready vehicle that can travel 100 miles per gallon. Tesla says it will have a car entered in the contest, it just won’t be the Model S.