Tesla’s $5 Billion Gigafactory in Reno-Sparks Area Expected to Boost Construction Industry

If as expected Tesla  announces on Sept. 4 after press-time that it will build its $5 billion gigafactory in the Reno-Sparks, Nev., metropolitan area to produce its next generation of electric vehicles, electrical distributors, local independent reps, electrical contractors and other buying influences in the area may enjoy some significant related electrical sales.

The factory, expected to be built 17 miles east of Sparks in the Tahoe Reno Industrial Center and employ up to 6,500 people by 2020 and open by 2017, would produce Tesla’s Model 3 electric vehicle. Elon Musk, the company’s CEO, plans to make this car the first electric vehicle affordable to the mass market, with a $35,000 price tag and a 200-mile driving range between charges.

While it’s tough to know how much impact a project of this size would have on the area’s electrical market, sources in several newspaper and wire reports said it would definitely give the construction industry in the Reno-Sparks area a much needed boost. According to construction employment data from the Bureau of Labor Statistics (BLS), the area’s total construction employment is down from a high of approximately 23,600 workers in 2006 to an annual average of 11,200 through this July.  BLS data said the Reno-Sparks MSA had 660 electricians working in May 2013, and according to Electrical Wholesaling data, electrical contractors in the market probably currently have around 1,456 employees.

It will be interesting to see if electrical distributors open any additional branches to service the factory. Two independent distributors, WEDCO and Grove Madsen have had branches in the market for quite some time, and Consolidated Electrical Distributors, Graybar and WESCO currently have branches in the market, too.

A post at www.tahoereno.com, a website operated by the Tahoe Reno Industrial Center, said the 106,000-acre site has 30,000 acres that can be developed, which would seem to be plenty of room for the factory, even at gargantuan scale. Eventually, Tesla plans a 10-million-square-foot factory — five times bigger than most conventional automobile assembly plants. Tesla is expected to tap into solar and wind in a big way to power the facility.

Panasonic will be working with Tesla to produce batteries in the factory. According to the blog post, “Musk said that it was possible that Panasonic could put up 30-40 percent of the cost, other suppliers 10 percent, and the winning state 10 percent — which could mean a $500 million price tag, if the overall price is the basis for that percentage.”

Multiple reports said Reno had always been considered to be a top option for the gigafactory because it’s only a half-day drive from Tesla’s facility in Fremont, Calif., and its Palo Alto, Calif., headquarters; Nevada’s business-friendly tax environment; and the fact that the state is the only place in the United States with active lithium mines. Lithium is a key component of batteries for electric vehicles, and an article in the Reno-Gazette Journal said Tesla is expected to consume up to 15,000 tons of lithium carbonate at the gigafactory.  Nevada had competed with Arizona, California, New Mexico and Texas for the facility.

The Reno-Sparks area has had success in recent years attracting other big-name companies. Apple has a data center there for its iCloud business, and according to www.appleinsider.com the company owns 345 acres of land in the area for this data center and related facilities. The Tahoe Reno Industrial Center where the Tesla facility will be located markets itself as “home of some of the largest e-tailers and retailers in the country including Wal-Mart, GSI Commerce, 1-800-Diapers, Toys-R-Us and Zulily.” It also says  the area is prime for solar or wind development and is in a geologically safe zone, an important consideration for data centers and is within one-day shipping of the 11 Western states.