Why businesses leave California 

Tesla Motors is an already-successful electric car startup company headquartered in San Carlos. It was formed in 2003 by a co-founder of PayPal, Elon Musk, whose net worth rose to $328 million when eBay acquired his company.

Tesla’s all-electric roadsters are being manufactured at a Lotus car factory in England. The first run of 300 was sold out in advance and deposits are being taken for 2008 delivery.

At a $92,000 base price, the Tesla is no plodding golf cart. It goes from 0 to 60 miles per hour in about four seconds, performance comparable to a Porsche 911. Driving a Tesla costs about one cent per mile, which translates to 135 miles per gallon. The car looks like a Ferrari racer and travels 250 miles per battery charge. Preview models won top awards from Forbes, Time and Popular Mechanics magazines in 2006.

Last month Tesla opened a research and development center in Rochester Hills, Mich., to take advantage of the Detroit area’s high-level automotive design and engineering talent pool.

As the next phase of its expansion, Tesla Motors decided it was ready to build its own state-of-the-art factory for making a new $50,000 all-electric sports sedan. Tesla planned to start with 400 workers and manufacture as many as 10,000 zero-emission cars by 2009.

PayPal, eBay and Tesla Motors are all Bay Area success stories. Tesla was seriously weighing the possibility of establishing its first factory close at hand in Pittsburg, along the East Bay manufacturing belt.

Instead, construction on the $35 million, 150,000-square-foot plant will begin this April in Albuquerque, N.M. The 400 new jobs will pay between $24,000 and $100,000 a year, plus full benefits and stock options.

New Mexico offered some $20 million in incentives. Bill Richardson, the Democratic state governor and presidential candidate, was directly involved in assembling the package. New Mexico’s Legislature will allocate $7 million to Bernalillo County to build the roads and utilities infrastructure for the plant.

Other incentives include a high-wage job tax credit, manufacturer’s investment tax credit and job training subsidies. In addition, New Mexico expects to buy 100 Tesla sedans for its state government fleet.

By contrast, Tesla CEO Martin Eberhard diplomatically described the negotiations as "complicated" when company executives talked with California officials about building the factory in Pittsburg. Reportedly, California did make a last-minute offer for the new plant, but it was millions of dollars below what New Mexico offered.

Putting it bluntly, this state should have done better. Gov. Arnold Schwarzenegger actually test-drove a Tesla last November and told the Los Angeles Auto Show, "It was hot." And why doesn’t the Bay Area have its own regional lobbying office to push Sacramento into being more competitive about retaining companies already here and looking to expand?

Meanwhile, at least the 160-employee Tesla headquarters is remaining in San Carlos, where its main function apparently will be to add more venture capital to the $60 million that has already come from Silicon Valley — funding that will now mostly be spent out-of-state.

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Staff Report

Staff Report

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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