For a while, it looked like nothing could go wrong for Elon Musk and his massive commitment to Texas. Tesla auto production was set to expand, The Boring Company had a promising project in Plum County, SpaceX was sending rockets into space, and the Neuralink Corporation, Musk’s neurotechnology start-up, was busy developing implantable brain–computer interfaces.
The love affair with Texas was mutual. The “Tesla effect” could be felt particularly along the Austin-San Antonio corridor. Local business leaders boasted of attracting other EV auto manufacturers to the area.
“Tesla’s decision to locate in Austin created a magnet effect for automotive suppliers who need to be in close proximity to the Gigafactory,” Gary Farmer, chairman of Opportunity Austin and president of Heritage Title Company of Austin, told local media. He cited interest from companies eager to locate near the Tesla facility. “We now have an entire economic sector focused on automotive manufacturing and innovation.”
For example, commercial truck manufacturer Navistar announced plans in March to expand its south Austin plant by 900,000 square feet to develop EV production, while in nearby San Antonio, Toyota is adding EV production of the Sequoia and the Tundra model SUVs.
There’s a lot riding on Tesla’s success in the state. The company’s factory in Fremont employs 22,000 people and builds four of its key vehicle models. The new $10 billion Tesla Gigafactory near Austin could eventually employ another 20,000 workers.
Tesla also filed a site plan in July on 36 acres of land adjacent to the Gigafactory, possibly for battery manufacturing. It has also leased a 440,000 square foot warehouse near San Antonio to store auto components in support of the Gigafactory.
What a difference a few months make.
Although Space X and Neuralink appear to be on track, Telsa’s recent disappointing third quarter revenues cause some to wonder if the auto manufacturer might slow its growth in Texas. Musk had signalled his intention to ramp-up vehicle production, despite a recession he sees lasting into 2024. Yet, while sounding optimistic earlier, by summer he was calling the new Gigafactory “a money furnace.”
Tesla’s disappointing Q3 announcements were followed by complaints filed concerning construction at the Gigafactory, alleging exploitative work conditions.
According to the Guardian, “bosses at an unnamed subcontractor falsified credentials instead of actually providing him and others with required job training involving education about health, safety, and workers’ rights – including the right to refuse dangerous work. Other whistleblowers are reporting what they describe as wage theft and say they weren’t paid at all or didn’t receive proper overtime compensation for their work on the hi-tech facility.”
Meanwhile, The Boring Company, Musk’s tunnelling venture headquartered in Pflugerville, Texas, has hit a snag.
In November, plans to dig a tunnel connecting Plum County with the 39-acre second phase of the Kyle Crossing retail hub were shelved due to objections from Union Pacific. The railway owns the tracks under which the tunnel would have been constructed. This would have been one of the few approved projects by The Boring Company. The company is in talks with municipal officials in Austin and San Antonio in the hopes of securing other new projects.
The Boring Company has also been the source of complaints concerning ecological damage, concrete production, wastewater dumping and permitting conflicts with residents and local officials near its headquarters in the lightly-populated rural area of Balstrop County.
Furthermore, Tesla’s plan to build the country’s first lithium refinery near Corpus Christi has not been finalized.
According to application documents filed with the Texas Comptroller, the estimated $375 million investment would include a long list of infrastructure and logistical support. The project received initial approval on Aug. 22 from the Robstown Independent School District for a multimillion-dollar tax break under the state’s Chapter 313 property tax discount, set to expire on Dec. 31. However, school board officials are under attack for delaying the required public hearings until Dec. 5, more than three months later.
“If this site is chosen, early construction could begin in the fourth quarter of 2022. The project will reach commercial operations by the fourth quarter of 2024,” the Tesla’s 313 application stated at the time. However, Bloomberg News reports Tesla has an alternate site in Louisiana under consideration.
Musk’s purchase of social media platform Twitter, finalized in November, may be proving a management distraction.
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