California may not be the front-runner for Tesla Motors’ planned $5 billion battery factory, but the company isn’t giving up on the state as its core manufacturing base. The maker of the Model S luxury electric sedan has boosted hiring in its home turf by about 13 percent, to more than 6,000 people, since the end of 2013, Bloomberg reports.
This makes Tesla (NASDAQ:TSLA) the leading auto company job creator in the country’s largest state economy, which is also home to the U.S. subsidiaries of major foreign automakers Honda Motor Co. Ltd. (TYO:7267), Hyundai Motor Co. (KRX:005380) and Kia Motors Corp. (KRX:000270). Automakers also maintain research and development operations in California because they want to be close to Silicon Valley. In February the 15-year-old alliance between Nissan and Renault opened a research center in Sunnyvale to develop new technologies in autonomous and connected driving.
California, which has high energy costs and strong environmental regulations that increase manufacturing operating overheads, was dealt a blow when Toyota Motor Corp. (TYO:7203) announced April 28 that it was uprooting its subsidiary. Toyota Motor Sales U.S.A. is moving it to Plano, Texas. Plano approved on Monday a $6.75 million package of incentives for the world’s largest automaker.
The Model S is manufactured in the company’s Fremont, California, factory near Silicon Valley, which employs most of the company’s California workforce. The company has added about 3,000 workers over the past year as it readies for the rollout of the highly anticipated Model X SUV early next year. Tesla is the only automaker with a manufacturing plant in the state; Toyota makes the Tacoma pickup truck in nearby Tijuana, Mexico.
Meanwhile, Telsa is shopping for a location for the battery factory it says it needs to increase manufacturing capacity in the coming years. The company initially announced that it was considering Texas, Arizona, New Mexico and Nevada as possible locations. CEO Elon Musk recently added California as a possibility, but the state will be facing stiff competition from the others for a facility that would employ about 6,500 workers.