Why Rick Perry wants Tesla Motors in Texas

Many states want electric car manufacturer Tesla Motors to build a 'gigafactory' in their states. But in more conservative Texas, Governor Rick Perry is working hard to market itself toward Tesla Motors, writes Jesse Morris.

A few months ago, Tesla announced its intent to build a “gigafactory” capable of doubling current global production of lithium-ion batteries, a need if Tesla is to be producing its projected 500,000 electric vehicles per year in 2020. At $5 billion, this would be an unprecedented, massive investment capable of bringing in thousands of jobs and dramatically decreasing the cost of lithium-ion battery packs. Tesla is considering five states for its potential investment: Arizona, California, Nevada, New Mexico, and Texas.

All of these states are working hard to bring the gigafactory home. But Texas, with its conservative population and government, is the one that’s most interesting to me. That’s because the Lone Star state, led by its governor, is marketing itself heavily to attract Tesla. Here’s how.

Allowing Tesla to sell direct

As in several other states, Tesla cannot currently sell cars direct to consumers in Texas. (Even so, Texas still ranks among the top states nationally for Model S registrations.) Many auto dealers are vehemently against changing this, claiming that their legally protected status as a middleman between car manufacturers and consumers enables them to promote competition among dealers and drive down prices, thereby “protecting consumers”—an argument that’s been thoroughly debunked and officially opposed by the Federal Trade Commission. In response to this law in Texas, Governor Rick Perry lambasted his own legislature and publicly announced his support for the state to authorize direct vehicle sales to consumers. Furthermore, the Governor himself is reported to be personally leading the negotiations. This contrasts sharply with Texas’ rich history of political donations to the oil and gas industry (in fact, more oil- and gas-related federal donations originated from a single Fort Worth zip code in the latest election cycle than anywhere else in the US).

Rebates for EVs

A proposed rebate incentive program for electric vehicles in Texas should be starting soon. The program only has enough money for about 2,000 EV rebates, but this move is more about public relations than it is about scaling EV sales. As currently structured the program excludes vehicles sold directly to consumers, effectively leaving Tesla out of the mix. However, Governor Perry has come out in support of HB 3351, a bill in the Texas legislature that would allow Tesla to both sell directly to consumers and, potentially, qualify the company for the new EV rebate program.

Building out charging infrastructure

Texas is also a leader when it comes to EV charging infrastructure. From Austin Energy’s 150-strong group of charging stations to eVgo’s “Freedom” network of stations at Walgreens locations throughout the Houston area, Texas is at the forefront of EV readiness. Just check out the impressive Texas River Cities Plug-in Electric Vehicle Infrastructure Plan to understand how much attention is being paid to the topic in one part of the state.

Financial incentives

Texas’ unique Enterprise Fund—a Perry-initiated to fund to help attract new jobs and investment in the state—has been waved around as an additional way to attract Tesla by helping to close a potential deal with millions in grant money. The state also has no corporate income tax (instead there’s a very low gross receipts tax on businesses) and a reputation for sniping jobs from other states unable to offer lucrative incentives.

The electrified road ahead for Texas

Here we have a deeply conservative, oil and gas-friendly republican Governor, who thinks climate change isn’t caused by humans personally leading the charge to bring one of the most promising electric vehicle manufactures in the world into his own state.

Sure, success means a clear political victory for the Governor with some 6,500 new jobs and additional state revenue from a gigafactory in Texas. But let’s be clear: for a deeply conservative state to embrace a cleantech company is a huge step for the US, a country where renewable energy and energy efficiency technologies have been framed as expensive, unrealistic options by the political right. Georgia, another traditional hotbed of conservatism, is also hopping on the EV bandwagon (with the help of a $5,000 income tax credit). The state lays claim to the fourth highest percentage of vehicle registrations coming from EVs in 2013, and Atlanta saw EV sales jump 52 percent between the third and fourth quarters of 2013, making it the fastest growing EV market in the US.

So bravo to Governor Perry for his embrace of Tesla (even if the factory ends up being built elsewhere), and here’s to erasing the political lines that may have separated people on cleantech issues in the past.