Tesla's Nevada Gigafactory Site Points to Problems in California

NEW YORK (TheStreet) –– Tesla Motors (TSLA) announcement that it will be building its Gigafactory in Nevada highlights that economic reform is needed around the country, especially in California, where noted venture capitalist Tim Draper has proposed breaking up the state of California into six states.

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"Losing Tesla to Nevada is just another reminder that our state needs change," Draper, founder and Managing Director of Draper Fisher Jurvetson, said in a press release. "California has high unemployment and the percentage of people living below the poverty line is steadily increasing. Our state needs a massive investment in infrastructure and a streamlined process to help grow and keep businesses."

Initially, Tesla announced it was choosing between four states (Arizona, Texas, Nevada and New Mexico) for the Gigafactory, when it unveiled plans for what the Gigafactory would look like, as well as its expected production levels and costs. California was not amongst them, a fact that CEO Elon Musk highlighted on the May 8 earnings call, due to "a complex and lengthy process for approval of Greenfield sights."

Read More: Here's What Tesla's Gigafactory Will Look Like

Musk noted Tesla could not afford to wait "like a year or more" for the decision on the Gigafactory to proceed due to regulatory rules in California, as opposed to other states, where "it's much more streamlined approach." Musk did note on the May 8 earnings call that California was back in the running to be considered because the state government tried to acquiesce to Tesla's demands for building the plant, which will house 6,500 permanent employees and thousands of temporary jobs and is expected to produce 500,000 electric vehicles by 2020.

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