Tesla motors is headed to Carson City, Nevada to plant their massive gigafactory. The California based electric car company made a 5 billion dollar decision and chose Nevada over California, Texas, New Mexico, and Arizona to build a advance battery factory.
This was one of the toughest decisions that the rapid growing company has faced. The company put so much emphasis on the location of the factory that made me wonder, why? Why should they care so much about a simple location? I then recalled the ten strategic decisions in operations management and how important and strategically planned a location should be. The five states were battling it out with one another as to who would get the opportunity to have a factory that would implicate “a move that Gov. Brian Sandovol estimates would have a $100 billion economic impact over the next 20 years” (WSJ).
The innovative company chose a state that offered them $750 million and $1 billion in tax abatements and $195 million in tax credits. Not only focusing on costs; the company truly thought out the infrastructure and logistics. “Nevada is close to Tesla’s Fremont, California assembly plant and has ready access to lithium, a raw key material for batteries that power electric cars” (WSJ).
Tesla played their cards really well in selecting Nevada. By picking a spot in the sunny, desert state they will be able to fully support a massive plant that would be energy self sufficient, using geothermal, wind and sun to provide electricity.
Personally, I think this was one of the smartest decisions that the company could have made in operations. By picking a place like Nevada they will bloom the job market in the state while boosting their finances. Currently, the unemployment rate of Nevada has been drastically high due of the economic downfall. That being said the civilians of the state will work for relatively low wages compared to the workers in California or Texas. This will not only help employ the jobless people of Nevada, but will save Tesla millions of dollars.
This transaction will not only benefit Tesla, but will also have a positive impact on Nevada as a whole. Currently, the state is known for Las Vegas and its nightlife, but what about the rest of the state? According to Forbes, the state will benefit in more jobs, a population boost, and overall a stabilized infrastructure that will drive in more companies; which will result in a positive effect on the state’s economy.
My question to everyone else is. What role do you think the location strategy plays in the success of the company? By being near customers, suppliers, and putting that much emphasis on the infrastructure; will it truly help the position of the company?