Jul 26, 2020 - Politics & Policy

Tesla's election-year gift to Texas

Gift box with tesla logo

Illustration: Sarah Grillo/Axios

Tesla's decision to build a $1 billion factory in Texas is a good bit of economic news for a state that's suffering in the throes of the pandemic.

Why it matters: The creation of 5,000 new manufacturing jobs near Austin comes as the state's ongoing coronavirus outbreak threatens to overwhelm hospital systems and tears at the economy.

  • It's also an election-year gift that could feed competing political agendas.

Driving the news: Tesla CEO Elon Musk disclosed the location of the company's second U.S. auto assembly plant during an investor call Wednesday to discuss its latest financial results.

  • Construction of the nearly 5 million-square-foot factory will begin this fall.
  • It will produce Tesla's unorthodox Cybertruck pickup and an electric Tesla Semi truck, as well as Model 3 and Model Y passenger cars for shipment to the eastern half of the U.S.
"We're going to make it a factory that is going to be stunning. It's right on the Colorado River, so there's actually going to be a boardwalk where there'll be a hiking and biking trail. It's going to basically be an ecological paradise, birds in the trees, butterflies, fish in the stream, and it will be open to the public as well."
ā€” Elon Musk

Context: In Texas, a red state where the race for president is viewed as a tossup, per a Quinnipiac University poll out this month, people care more about the economy than the pandemic or racial inequality.

  • On this issue, Trump has the advantage, leading Biden by a 16-point margin (56% to 40%), according to Quinnipiac.

What to watch: Both candidates could try to use Tesla's move to bolster their own economic narratives. President Trump, elected in 2016 on a pledge to bring manufacturing jobs back to America, often takes credit for companies' decisions to add jobs or expand U.S. production, while attacking CEOs like GM's Mary Barra that do the opposite.

  • On Thursday, Trump told Fox's Sean Hannity: "I said, 'Elon, build a factory in Texas' .... He called me up just a little while ago to say 'I got it done,' meaning he got it done but I was pushing that job very hard from Elon."
Trump tweet
Screenshot: @realDonaldTrump (Twitter)

The other side: Democrat Joe Biden, meanwhile, can point to Tesla's factory as a symbol of the types of clean energy jobs he'll promote if elected.

Of note: Three other electric vehicle factories are currently under construction in the U.S.

  • This week, Nikola broke ground on a $600 million factory near Phoenix that will build electric semi trucks starting next year and hydrogen fuel cell trucks in 2023.
  • Lucid Motors' electric sports car will start production by the end of the year at its new factory, also near Phoenix.
  • Rivian, which plans to build electric pickups, SUVs and Amazon delivery trucks, is renovating a mothballed Mitsubishi plant in Illinois.

The bottom line: Both candidates could try to use Tesla's gift to their own political advantage as they try to lift Texans past the pandemic.

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