Don't get fooled again

Despite a promise less than a year ago to build a new factory in San Jose, and false hopes raised in April that the plant was back on, Tesla will be moving its HQ and factory to an abandoned Agilent (i.e. HP) factory in Palo Alto.

Tesla got the federal money it needed to build its sedan, which San Jose politicians thought was going to be built at the north end of the city, but was put on hold less than a month later and cancelled in January. The April promise from CEO Elon Musk was only

"I can say, definitively, the power-train engineering will remain in the Bay Area," Musk said. "Silicon Valley has the best electrical engineers in the world, and I'm a big believer in keeping some of the production here in the Bay Area."

If you’re going to pay the high Bay Area housing costs, you might as well have the high status address almost on campus at Stanford. (The San Jose location in Aliso was a long way from anywhere).

Still, I have to wonder whether the San José politicians were either premature in their big announcement or wrote bad contracts.. They won’t make that mistake again, and hopefully thier PV manufacturing bets will turn out better.

It certainly seems that my skepticism 11 months ago was justified:

The idea that the Bay Area will become a hub of manufacturing high-tech cars is just laughable. Because of labor, land, taxes and all the other costs, by the end of the year Intel won’t even have make semiconductors here — and they have a much higher technology content and value per pound.

Most of the parts for an electric car are shared in common with fossil fuel cars, and so if EVs catch on, nearly all of the electric cars in North America will be made in factories owned by the major world automakers (in Michigan, Ohio, Kentucky or wherever). Perhaps the Prius will someday be made at NUMMI in Fremont — and even the 2010 plug-in version — but today NUMMI is the only remaining auto plant in North America west of Texas.

As it turns out, Monday’s Tesla announcement came on the same day that the NUMMI plant produced its last GM car after 40+ years of production. Rumor has it that Toyota also plans to leave — ending more than 4,000 jobs.

Tesla is a highly visible symbol of the next generation of passenger vehicles. Whether it will ever be a major employer — or in a century of open innovation, just a supplier of key subsystems — remains to be seen.