Every month another company, it seems, announces plans to build a factory in Nevada to churn out the future of energy technology. A year and a half ago, Tesla started building a massive battery factory, dubbed the Gigafactory, just outside of Reno. It has since been joined by a number of other high-tech companies involved in battery recycling, a futuristic transportation system, and electric cars. Nevada, known mostly for gambling, turns out to have a unique set of characteristics like the low cost of doing business, large incentives, the ability to move quickly, and ample clean energy resources that make it attractive to companies developing innovative energy technologies. It has slowly become a hub for the manufacturing of energy storage, clean energy, and greener transportation that could one day be as important as Silicon Valley is to Internet and software startups.
Secretive Tesla-rival Faraday Future has its sights on Nevada. The company said it planned to build a $1 billion electric car factory outside of North Las Vegas early next year if legislators approve a package of incentives and tax breaks. The startup, backed by Chinese Internet billionaire Jia Yueting, aims to build a three million square-foot factory on a 900-acre site that will churn out electric vehicles. Earlier, Nevada made the news again when Hyperloop Technologies revealed that in 2016 it plans to start testing an ultra-fast transit system known as a hyperloop on 50 acres of Nevada desert. Tesla CEO Elon Musk has popularized the hyperloop idea, which involves pods riding around on an air cushion through reduced-pressure tubes. Yet another company, Aqua Metals, a battery recycling startup, said it would build its first battery recycling factory on a site near Tesla’s Gigafactory. Aqua Metals, which recently closed on a loan to fund the project, has developed a more energy efficient process than traditional methods to recycle lead acid batteries—the kind that start up gas-powered cars (Tesla uses lithium-ion batteries for its cars).
In addition to the arrival of the energy tech companies, Nevada is at the forefront of clean energy projects including solar, wind, and geothermal farms. Apple built a data center outside of Reno, and has been building a solar farm about 70 miles away to help power its operations. A geothermal startup called AltaRock Energy bought a geothermal plant earlier this year about a hundred miles east of Nevada’s Black Rock Desert. The company is using its novel technology to enhance the geothermal well and help the struggling site pay back a loan backed by the Department of Energy.
Nevada’s attraction is that it has one of the lowest costs of doing business in the West. The state has no corporate income tax, minimal employer payroll tax, and land is relatively cheap. At the same time, the Bay Area and Silicon Valley are within a drive of just a few hours, enabling employees from companies like Tesla to quickly travel there from their headquarters near San Francisco. Because of the way the state operates, Nevada’s environmental and regulatory bodies can move more quickly than many other states. The political mindset is that government should get out of the way of business—a laissez faire ideology that explains the rise of the gambling industry in the state.
When Tesla’s Musk went looking for a home for the Gigafactory, he wanted a location where he could immediately start building the massive structure. He did not want to wait during a lengthy process other states require for meeting environmental reviews and regulations. For years, Nevada politicians have wanted to stimulate its economy and move away from its dependence on gambling. As a result, the state economic development agency has aggressively offered companies like Tesla big incentive packages to build their factories in Nevada. Tesla was able to acquire $1.4 billion in tax breaks, free land, and other benefits from the state.
Nevada’s abundance of clean energy from solar, wind, and geothermal farms also makes it attractive to companies like Tesla. Eventually, Tesla hopes to operate its battery factory entirely on clean energy, which would be difficult to do in other states that lack enough production of clean energy. Even excluding clean energy, Nevada is already home to low cost and reliable energy from natural gas. Such sources are necessary for energy-intensive factories. Furthermore, Nevada is rich in minerals that are critical to some clean tech companies. For example, the state has one of the few lithium mines in the U.S., producing a critical ingredient for batteries. Tesla plans to buy lithium from a mining project that is under development 200 miles from its battery factory.
With its growing mass of energy tech companies, Nevada now has an ecosystem that invites more to move in. Construction companies are building roads throughout the sparse, rural areas around the Gigafactory to bring in supplies and employees. Construction workers at the Gigafactory can continue onto other projects like the Hyperloop test track or the Faraday Future car factory. All of this is mostly good news for Nevada’s smaller cities like Reno. For years, it has been economically depressed and dependent on gambling and tourism. But now the city is morphing into an area with highly-skilled manufacturing jobs. And a significant part of those jobs are coming from the future of energy technology.
The Good News Is . . .
- U.S. import prices fell in November as the cost of petroleum and several other goods continued to decline, suggesting that cheaper crude oil and a strong dollar will keep inflation pressures from imports subdued for a while. The Labor Department said import prices dropped 0.4% last month after a revised 0.3% decrease in October. Import prices have declined in 15 of the last 17 months. In the 12 months through November, prices tumbled 9.4%. Dollar strength and a sharp decline in oil prices have dampened inflation, leaving it running well below the Federal Reserve’s 2% target.
- Leading fashion retailer, Nordstrom, Inc., reported earnings of $0.73 per share, an increase of 5.8% over year earlier earnings of $0.69 per share. The firm’s earnings topped the consensus estimate of analysts by $0.02. The company reported revenues of $3.1 billion, an increase of 8.9%. Management attributed the company’s results to higher than expected growth in its Nordstrom Rack and Nordstrom.com units.
- DuPont, the 213-year-old inventor of Kevlar, and Dow, the 118-year-old maker of plastics and chemicals, have announced a “merger of equals.” Shareholders of each company are expected to own half of the newly combined business, to be called DowDuPont. Under the terms of the merger, Dow shareholders would receive one share of the new combined company for each of their shares, while DuPont shareholders would receive 1.282 shares for each of their shares. Once combined, DowDuPont plans to split into three independent companies, each with its own specialty. The three businesses will include: one specializing in agricultural chemicals, with $19 billion in pro forma sales last year; one in plastics and other materials, with $51 billion in annual revenue; and a third in specialty products like those for electronics and nutrition, which would have about $13 billion in annual sales.
- http://reut.rs/1J3m40T – Reuters
- http://cnb.cx/1gct3xa – CNBC
- http://bit.ly/1jVymBQ – Nordstrom, Inc.
- http://nyti.ms/1Z35qYL – NY Time Dealbook
A special type of retirement account
funded with after tax dollars like a Roth IRA,
but with major beneficial differences…