Arizona, Calif., turn hopes to second Tesla Gigafactory

The states passed over by Tesla Motors for its 6,500 job Gigafactory turned their sights to a second, possible job-generating battery factory that the car maker has said it could build.

"We lost Apple to Austin and got them the second time around," said Barry Broome, president/CEO of the Greater Phoenix Economic Council, referring to the tech company's supplier factory in Mesa that followed a failed bid to land Apple in Arizona. "I'm optimistic about Tesla in the future."

Nevada Gov. Brian Sandoval has called a news conference for 7 p.m. ET Thursday in Carson City where the deal is expected to be announced. A source told USA Today Wednesday that Tesla (TICKER: TSLA) had chosen Nevada for its giant battery factory. Tesla recently confirmed that it has been excavating at an industrial park near Reno, but stopped short of saying that it had made it the final choice for plant.

A Tesla spokesperson told a reporter at Texas' KVUE-TV, in Austin, that talks will continue with Texas and four other states, and that the company always planned to choose more than one site.

The February announcement that Tesla was shopping for a factory location touched off a high-stakes bidding war among California, Nevada, Texas, Arizona and New Mexico. All have tax benefits and other incentives, including cash grants, to land major economic developments.

Nevada recently passed a state law that could discount electricity 30 percent for the Tesla project in the first year.

Musk has said he wants the factory to be powered by wind, solar or other renewable energy. But the factory is also likely to be tied into the larger electricity grid to supply steady power around the clock and back up intermittent renewable power sources.

California lawmakers created draft legislation that would have offered incentives to Tesla to keep the battery factory in Tesla's home state, but convened last week without voting on the bill.

"Tesla and Tesla's investments have always gone to California," said Joe Wallace, managing director of the Coachella Valley Economic Partnership, a business incubator near Palm Springs, Calif. "They don't have an aversion to California."

Wallace argued that an inhibitive business environment has hurt the state's ability to compete for jobs, including those that the Gigafactory would have generated.

"If you fight and lose, you live to fight another day. That's fine," Wallace said. "But we didn't fight."

Brook Taylor, a spokesperson for the California Governor Jerry Brown's Office of Business and Economic Development, declined to comment on what prevented California and Tesla from reaching a deal.

"No other state has added more jobs than California since the recovery began and we'll continue to work closely with businesses, including California-based Tesla, that want to grow here," Taylor said in an email.

ARIZONA SPECIAL SESSION

Arizona Rep. Ethan Orr, R-Tucson, suggested in June that Arizona call a special session to consider additional incentives to compete for the factory, in light of California's proposal.

However, legislative leaders said at the time that Tesla had not provided a clear indication of what the state would need to do to get the factory, and they would not call such a session without that.

"A special session sounded like a good idea at the time, but in hindsight, I don't think a special session would have helped," Orr said Wednesday. "They made a very public show of playing states against each other, and that can lead to a race to the bottom."

He said Arizona would have a better chance at landing the next economic development project by increasing the funds available to close deals, providing a better educated workforce, lowering energy costs and being able to assemble and permit land faster.

Chris Woodyard for USA Today in Los Angeles and KVUE-TV in Austin contributed to this report.