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Budget Watchdogs Urge California To Show Restraint As Tesla Gigafactory Competition Heats Up

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FREMONT (CBS SF) — The race for states to build Tesla’s $5 billion “Gigafactory” for advanced batteries is intensifying.

Earlier this week, budget watchdogs wrote an open letter warning five states not to offer too many incentives or tax breaks to Tesla. California and Neveda are among the states competing to be home to the electric carmaker’s battery production plant.

Those watchdog groups are calling this competition among the states a “great race to the bottom” with no clear winner.

Since the new factory would come with 6,000 new manufacturing jobs, it’s easy to see why California, Nevada, Arizona, New Mexico and Texas were all vying for the Gigafactory.

But Telsa wants the winning state to pay at least 10 percent of the cost of the factory, or half a billion dollars.

The states have tried to sweeten their deals by offering financial incentives and promises of fast-tracking environmental permits.

Now several watchdog groups across the southwestern region have banded together to urge lawmakers to tap the brakes and work together.

In an open letter released Monday, the group said “…It is time to break the harmful pattern of one state ‘winning’ a high-profile competition … The main goal is the long-term growth of American jobs, not any single state’s ribbon cutting … Talk to each other, let the public into the process … Strike a smarter deal that will preserve the tax base for the benefit of all.”

CEO Silicon Valley Leadership Group Carl Guadino said “We’ve known about solar companies that did almost the same project in California that took 4 to 5 years, and the same project in Colorado, that took 8 to 12 weeks. Keep stringent regulations and set sound standards, but do it in a way that companies can meet it efficiently.”

Tesla’s CEO Elon Musk has said in the past that it’s more important to get this project done quickly then the financial incentives that might come with it.

There’s no official comment on this letter from Tesla or from lawmakers in Sacramento.

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