LBPOST.com: Battle For Tesla Motors Intensifies, New Details Emerge

Thursday, September 2, 2010

Battle For Tesla Motors Intensifies, New Details Emerge

by Ryan ZumMallen | Long Beach News | 09.28.09 |

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As Tesla Motors attempts to decide between building a new electric automobile production plant in Long Beach or Downey, officials from both cities are speaking out in hopes of appearing more attractive to Tesla. Armed with $456 million in loans from the Department of Energy, Tesla is ready to move forward with production plans for its attractive Model S four-door electric sedan.

But new documents obtained by the LBPOST.com today indicate that the City of Long Beach may be at a distinct disadvantage when it comes to drawing Tesla to the city, despite being able to offer greater tax incentives than Downey can. Namely, the fact that Boeing is the sole owner of the facility and therefore is solely in charge of negotiations with Tesla; Long Beach has virtually no say in the matter. The City of Downey, on the other hand, owns about one-third of their proposed site and can therefore be involved in negotiations from the standpoint of city government.

In fact, Long Beach Economic Development manager Robert Swayze wrote to City Manager Pat West in August, "The decision to locate Tesla in Long Beach is ultimately in the hands of Boeing and Tesla."

Today's news that Councilmember Gerrie Schipske recently created and posted a YouTube video (UPDATE: video has been removed from YouTube) touting Long Beach's tax credits for new businesses is making a lot of noise throughout the city, amid rumors that Tesla has been leaning towards choosing Downey after the city took out a full-page ad in the LA Times and made other efforts to court the automaker. Schipske's video is framed as a love letter and ends with: "Tesla, if you want tax credits... Long Beach is your site..."

The proposed Tesla site in Long Beach is a former airplane production facility that is owned and operated by Boeing, while the proposed site in Downey is a former NASA production facility that is majority-owned by Industrial Realty Group and part-owned by the city of Downey. That, says Downey mayor Mario Guerra, is a distinct advantage for his city.

"In Long Beach, Tesla has been negotiating with Boeing," he said today. "In Downey, the city has ownership of the site and therefore more insight into negotiations."

Guerra also says he disagrees with some of the assertions in Schipske's videos. It's true, he says, that Long Beach can offer tax credits that Downey - as of now - cannot.

But Guerra is downright bubbly when talking about Tesla, excited over the possibilities. He also refuses to acknowledge a rivalry between the two cities, referring to Long Beach as "our friendly neighbors to the south." He does point out, though, that both cities are competing for a Los Angeles County Economic Development Corporation (LAEDC) award for the county's most business friendly city. He calls Long Beach the front runner for the award, as Downey is a first-time finalist.

�It'd be kind of ironic," Guerra says with a laugh, "If Long Beach won that night and we ended up with the bigger prize.�

In past Long Beach City Council meetings, Councilmember Schipske has called into question the efforts that the City of Long Beach has taken to woo Tesla. Documents obtained by the LBPOST.com include letters from Manager of Economic Development and Management Affairs Robert Swayze to City Manager Pat West that explain representatives from Tesla met with Long Beach officials in both January and March of 2009 to discuss production plants in the city.

Swayze also sent a letter to Tesla CEO Elon Musk in June that congratulated the company on receiving the Energy Department loan and touted Long Beach's commitment to green transportation. But that letter's main topic is the possible creation of an EV Mall in Long Beach - essentially a dealership row of electric automakers that could potentially include Tesla and other upstarts like Fisker, CT&T, Aptera (pictured at right), Coda and others. The letter includes an article from the Long Beach Business Journal that outlines the EV Mall idea, but there is no mention of bringing Tesla to the city for production in that particular letter.

In fact, Swayze's letter to West essentially takes responsibility away from the City of Long Beach and places it on negotiations between Tesla and Boeing. The property owners will seek a deal that is most advantageous for them, he says, and that the City of Long Beach will assist however possible but is not involved in the business negotiations.

Swayze wrote to West in August:

The decision to located Tesla in Long Beach is ultimately in the hands of Boeing and Tesla. The real estate negotiations are complex, particularly in light of the fact the $465 million dollar loan cannot be used for construction or tenant improvements. The City stands ready to assist the company Boeing selects as the future owner of the 717 site.

To download and read the 28-page document which includes Swayze's letters to West, Musk and other automakers, click here.

We will continue to monitor the process of these negotiations. For now, Tesla is taking deposits for the Model S. There are a myriad complications with Tesla building a brand-new model from the ground up, most of them financial. The process often costs even large manufacturers close to a billion dollars to design and produce a new platform, not including the purchase and retrofitting of a plant that lists in the hundreds of millions of dollars. The $465 million loan is a large chunk of change, but Tesla has danced near the limit of their bank account before and the Model S will be a true test of the company's efficiency. Time will tell whether or not Long Beach becomes part of that wild ride.

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Comments

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19 Comments so far.

Boo
That'd be a huge loss to LB

OMG!
OMG, has anyone seen this embarrassment on YouTube?!?!? I sure hope Tesla hasn't seen it, because if they have - the deal is over and Downey wins. Who on earth approved such juvenile work? This cannot be real. If the LA Times were to get a hold of this Long Beach would be the biggest embarrassment. Clearly, this City has not learned what it takes to make itself attractive to businesses and this effort clearly shows that. Citizens of Long Beach, UNITE. This government is sad and confused and cannot make the correct effort. Vote to replace your leaders now. It's so sad to watch this city become a ghetto but it's no wonder - look at the leaders.

Jillian
WTF? That video is hilarious (not in a good way, either). Tesla will be laughing all the way to the bank - in Downey.

Nikol
Sigh

lbresident
Let's not get carried away. The substance is strong regardless. Tax credits are important. Let's hope this works out for LB.

Concerned
Yes, indeed OMG. Thank you. Voters it is time to take note!

Juan Pardell
Appearantly, Councilmember Shipske has removed the video from YouTube.

Ryan Z
You're right, Juan. I've added a note in the article to acknowledge that the video has been removed from YouTube

Jon in the 5th
Went to watch the video and it has "been removed by the user". Sounds like a good move, from the comments here. While getting Tesla would be HUGE for Long Beach, don't we have someone better to try to get it done? We really, really need a good councilperson in the 5th! HELP!!!

Sander
I'd like to mention that, while Downey has many great qualities, Long Beach has museums, universities, excellent neighborhoods, and an abundance of skilled workers. It also has vast parks, many excellent golf courses, thriving night-life, and fine dining. It also has ocean breezes, something Downey sadly lacks. If our leaders are serious about encouraging any business to locate here, it would help if they understood just how fantastic our fair City actually was.

Stepping Out
Once again, through our own elected officials, we cannot get out of our own way. Let's get control of the amateur politicians. Where is the leadership of the Mayor.

Angel
Mayor Foster -you are the man! You are a business CEO. Get a LB Business Round table of the Business Community, LB Port, University, LBCC, Trade unions and State/Federal Elected officials to create a strategy to make the deal happen. Downey has little to offer in terms of resources. Mayor get it done!

Paul
OMG! said,"This government is sad and confused and cannot make the correct effort. Vote to replace your leaders now. It's so sad to watch this city become a ghetto but it's no wonder - look at the leaders." OMG you are aware that the city, meaning the Council, Pat West, the Mayor, Dennis Thys, and the rest of the crew, has fought residents to complete a plan for busing into town mentally ill homeless people from County wide locations for, "treatment." Gerri was the main push behind this until it starts to make people have questions about her at election time. These homeless could be just about anyone that is mentally ill including child molesters. They make money from the homeless and some see it as an economic engine. I rest my case as to why they all, including BoB need to go. "Sad and confused" is truth also, OMG!

downey resident
While there are differences in both cities, mostly superficial, both cities are great and can offer many companies, like Tesla, a good workforce, great resources and business friendly environment. History has shown that both Downey and Long Beach have a very solid and reputable manufacturing base. The two cities are almost complimentary to each other. Although it seems like a company such as Tesla has driven each city into a competitive race with each other, we shouldn't forget that anything that brings jobs into the region is good for all cities in the southeast county area.

lav
Tesla is an exciting company. But I live very close to that facility and want to know what kind of an environmental impact it will have on the areas water, air, etc. What kind of waste is created in this kind of production and how is it handled? I haven't seen any of the articles or letters that I am constantly receiving address this.

lbresident
downeyresident, good post.

downeyrules
Downey has plenty to offer Tesla, easy driving to anywhere in Southern Ca. great clean neighborhoods, good schools, and a budget that is not in the red. Downey has a 50 million dollar reserve in the bank, and not to many cities these days can say that.

Kenny
I agree, great post Downey Resident whatever city they choose it will be a good thing for the region. It's refreshing to see a positive message of cohesion in directly below Paul's paranoid/delusional rant posted above.

chrissy
Oh Long Beach will screw this one up, do any of you remember the HP plant that was possibly going to locate where the crime infested mall is now on Carson and the 605, ask your dearest government about that and all of the nice paying jobs that went away, so instead we have a crime problem, and minimum wage jobs there. Ask the dear city about what happened to the multi sports complex that was going to be a COP deal between Signal Hill and Long Beach an actual race track with production facilities in Long Beach, and the space that was going to occupy this great proposal are all old oil fields that are ugly! Seem to remember Penske Was involved, and where did the track go, Fontana. Why, because they had less BS to put up with. I would fall out of my office chair if we end up with this great opportunity in Long Beach. The city does not know how to attract business, they know how to make us go away. My business is in another city as my business license fees are so much lower here than in Long Beach. And funny I haven't heard a single thing about tax credits to new business? So where is this grand plan that someone thinks they know about posted? Ugghhhhh. It just keeps getting funnier and funnier living in this city. There is not future unless there is a plan to make this place the city it was. Wake up Long Beach! Boeing will be gone soon as well. Then what do you have left. The dead Queen Mary. Another mall like place by the Aquarium, oh that's right we have a convention center. But you drive through hell to get to it and it is not close enough to the airport. I go to very large conventions they are usually in Las Vegas, imagine the dollars that the city would bring in, if that was truly a functional place. Oh the Grand Prix once a year. There should be more of these events, Wow thats right we didn't get along with Signal Hill well enough, and we lost our race track. Silly Long Beach, do you know how much money is in the Nascar series alone. Not to mention all of the other organizations, It is a fan populated event. I went to the hearings on the track and just shook my head. Old people complaining about the noise and the traffic it would cause. Personally I would rather see a race track there versus seeing all of the drug houses that the prosecutor can't seem to do anything about. Oh Well. yes where ever the new Tesela goes it will be a gift as we have only one auto plant left in Fremont CA, but guess what Toyota is closing it down, California can not step up to the plate let alone the cities to keep industry here. I heard something that boeing actually has to fly the C17's to Arizona to paint them. Whats up with that.

Long Beach News

LBPOST.com Managing Editor Ryan ZumMallen keeps up on all the current and breaking Long Beach news.

Ryan ZumMallen has served as the managing editor of the LBPOST.com since 2007. He graduated from CSULB with a degree in Print Journalism in 2008 and is a member of the 2009 class of Leadership Long Beach. You can find him on various basketball courts around the city.

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