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How Elon Musk Hustled $1.4 Billion Out Of Nevada For Gigafactory

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This is The Morning Shift, our one-stop daily roundup of all the auto news that's actually important — all in one place every weekday morning. Or, you could spend all day waiting for other sites to parse it out to you one story at a time. Isn't your time more important?

1st Gear: Musk Doesn't Want To Believe It, But He's A Hustler

It's quite possible that the Gigafactory will be a huge boon to the Nevada economy forever and it's certainly fair to say that Elon Musk is within his rights to try and get as much money ahead of time out of states competing for the chance to host his battery mega-plant — certainly other automakers do this shit all the time.


But if he ever acts the innocent about the proceedings I think it's fair to say, if this Fortune story is even partially correct, that Elon Musk is a hustler of the highest order, matched only by the whorehouse owner who got Musk to land outside Reno.


Here's the setup:

But “Do the impossible” is one of Tesla’s slogans, and Musk set out to make it happen. He looked to spread the costs, seeking a mammoth package of incentives from states for the right to be the factory’s home. He succeeded—and then some. Musk landed a stunning $1.4 billion in tax breaks, free land, and other beneficence from Nevada to build the factory outside Reno. It’s one of the biggest gift baskets in history. Moreover, the other companies that have received such massive largesse were giants like Boeing, Nike, and Intel with decades of profits and much more predictable future sales.

These days companies routinely use the cudgel of jobs to extract huge offers from desperate states—a process that can resemble a shakedown. Musk showed himself to have nearly as much genius for that sort of maneuvering as he does for innovation. He took a process that typically plays out behind the scenes and made it public. Musk played an Oz-like role as master orchestrator, sending signals through earnings calls and blog postings, while keeping the states in the dark and playing on their fears of losing out. The combination of his strategy, the electric Musk factor, and the lure of 6,500 jobs inspired excited bidding among seven states and staggering leaps of faith. States were willing to move mountains (or highways, as the case may be) for a chance to have the factory.

All the twists and turns are pretty amazing, with Must pulling off the ultimate "will he won't he" gag to perfection and using the media (including us), his blog, Twitter, and the calendar against the states in the hunt for the factory.

For example:

In retrospect, Musk’s next move seems like a calculated bit of misdirection. On a May 7 earnings call, he announced that Tesla would soon break ground on “multiple” gigafactory sites, even before deciding where to put it. Musk elaborated at the annual shareholders meeting a month later, saying the company would begin site preparation work in “two or maybe three states, all the way to creating a foundation and completing the plans and getting approvals and everything”—to assure the plant was ready on time. Musk was also now saying he didn’t expect to make a final decision before year-end. The man who had previously pushed the states to act quickly now looked as if he would extract advantage by showing he was in no hurry. (O’Connell denies Tesla was “disingenuous” with dates—and then seems to say the precise opposite: “You have to create forcing mechanisms in these processes. We had a straw man for how this was going to go…We took the time that was necessary.”)


Just read the whole thing. It's great.

2nd Gear: BMW And Tesla?


Every single thing Elon Musk says is news. Every conversation he has is news. Is it all a feint? Is it all truly casual? It's hard to know what to believe.

Der Spiegel via Reuters has this gem:

In an interview published on Sunday, Musk described BMW's production of carbon fibre reinforced car body parts as "interesting" and "relatively cost efficient."


"We are talking about whether we can collaborate in battery technology or charging stations," Musk was quoted as saying in the interview.


This carbon fiber thing is absolutely true, and the proximity of BMW's carbon fiber production to Tesla's car production is interesting.


However, a Tesla spokesperson said it was "a casual conversation" with BMW.

What do I think is going on here? I can't say I know for sure, but Musk is trying to push his battery and charging technology on everyone because he has to. A little piece of the puzzle mentioned in the story in 1st gear is that, even with his wildest estimate of Tesla growth, Musk probably needs the factory up at full capacity and there isn't a market for that many batteries yet.


And on the charging front, we've known for a while that with Musk not abiding by SAE charging standards it only behooves him to get other automakers to use his charging tech.

3rd Gear: Is Ford Launching A New Scion-like Subbrand In Europe?


While this ends up taking a quote far, far to the extreme, I don't blame our old friend Mark Stevenson for making the leap from a Jim Farley Dacia reference to Ford launching a budget brand.

Here's the nut:

“Oh, I don’t know,” Farley said with a laugh. “We’ll see. I think I’ll be busy doing other things in Europe than driving fancy cars. I’ll probably be driving a lot of Fiestas and Peugeots and Renaults and Dacias and Seats and Skodas. That’s really what matters.”

The executive then continued on, in a relaxed manner, about the changing landscape of executive profiles. But, as soon as we asked about the possibility of Ford giving Dacia a challenge, the tone changed significantly.

“No comment. No comment,” said Farley before the question was even finished. He then turned away, showing his intention to take no further questions.


Was this him skirting a tough question or did Mark just let slip that he's Canadian and Farley decided to find an American or European reporter to talk to?

Not sure, but what the article doesn't mention is that Farley is the master of the budget sub-brand, having made his name with launching the Scion brand for Toyota which, it should be noted, fell flat after he left. It would absolutely make sense for Ford to give it another try.


4th Gear: Chrysler Going To Try And Fix Those Jeeps


After getting yelled at by NHTSA for not implementing their non-fix fixes, Jeep now says they're going to actually try and get recalled Jeeps turned around.

Why the sudden interest? There's this from David Shepardson:

The letter from NHTSA came the week after a 23-year-old pregnant woman from Ferndale was killed in a fiery crash on the Lodge freeway in a recalled 2003 Jeep Liberty.

Kayla White was killed when her Jeep was struck from behind, causing it to overturn and catch fire. She died of burns and smoke inhalation, an autopsy found. It’s not clear if the trailer hitch would have had an impact.


No one wants blood on their hands.

5th Gear: I, Robotcar


How do you program ethics into a robot car?

The most interesting part of this AP report on the topic is the revelation that, for the most part, self-driving car developers aren't.


For now, Google is focused on mastering the most common driving scenarios, programming the cars to drive defensively in hopes of avoiding the rare instances when an accident is truly unavoidable.

"People are philosophizing about it, but the question about real-world capability and real-world events that can affect us, we really haven't studied that issue," said Ron Medford, the director of safety for Google's self-driving car project.


It turns out only BMW is investigating the issue so, you know, Ze Germans might determine what we end up doing.

RULE #1: A car may not harm a sausage stand or, through inaction, allow a sausage stand to be harmed!


Reverse: All That Corn

John Froelich, the inventor of the first internal-combustion traction motor, or tractor, is born on this day in Girard, Iowa.




Neutral: Who Got The Better Deal In Nevada? Musk? Whorehouse McCowboyHat? Sandoval? Would you have made the deal if you were governor?

Photo Credit: Getty Images