TX A&M’s John Reagan on the conflicting aims of Texas and Tesla

At long last, we have arrived at the endgame — the chief conflict between South Texas and the state of Texas. The conflict centers on whether Tesla would be allowed to build battery packs…

TX A&M’s John Reagan on the conflicting aims of Texas and Tesla

At long last, we have arrived at the endgame — the chief conflict between South Texas and the state of Texas.

The conflict centers on whether Tesla would be allowed to build battery packs in Texas or not.

The problem is that our state — those that enjoy state-sponsored power — doesn’t want Tesla doing business, at least in a setting where I can buy the Model 3.

Two major South Texas electric utilities have suggested requiring Tesla to get its electricity directly from them rather than from the grid. If that’s the case, if Tesla can’t get electricity cheaper from the grid, then the answer may be to build some kind of lithium-ion battery factory.

Here’s where it gets complicated: Tesla and the utility suppliers — some of whom could also be owned by a government — are suing each other. (Yes, like they’re doing so for the first time? That’s unusual!) These lawsuits are confusing and rife with technical claims made by the two sides that render the negotiations impossible to win for anyone. (People on both sides are nervous that any decision might have long-term implications that affect the privatization of the electric grid.)

Meanwhile, Ted Cruz and Jim Hightower have both thrown their hats into the ring — in far different ways. Cruz wants Tesla’s electric car manufacturing in Texas. Hightower, who’s been pro-environment, wants Tesla to build its battery factories outside of Texas.

Why do we care about this? We care because it’s the gateway to a new world — and we don’t want to lose control of it. We want Texas to be able to open its doors wide, despite their many contradictions.

So, is South Texas doing Tesla a favor by providing an alternative to the grid? It would probably have helped as the company prepares to make its first jump to the mass market. But, Musk and Tesla don’t want the current grid. So, how will they handle an electric car battery factory?

In April, Musk announced the location for the factory would be found in “ready to go” lease agreements. (Note: These will cost billions of dollars in capital, meaning there may be other states that could benefit.) If Musk decides to choose Texas, his company would send out contracts for pre-production of batteries with leading suppliers in the state.

Tesla would also put production capacity inside an existing 400,000-square-foot facility owned by Future Materials in nearby LaMarque. With other electric vehicle components to build, the total local capacity would be a smart match to meet customer demand.

On the other hand, if Musk builds the factory outside of Texas, it may not boost the economy enough to offset the benefits that come with continued involvement with the state’s grid.

We don’t want to lose control. When Tesla builds in Texas, the plant will be ultimately responsible for supplying about a third of the state’s electricity. That doesn’t make Texas (or the world) any more of a friend to Tesla than if they decide to build it in a different state, like New Mexico. If a Tesla battery factory weren’t in Texas, where else would Tesla build the batteries it would use to build electric cars?

Now, we are not a dogmatic group of people. Why should we need to compete with Texas for this particular factory? Why can’t Tesla and the state of Texas find a new way to cooperate?

I’d put it like this: Texas loves the coal and nuclear power industries (not the other way around). They want an open and competitive system that will allow them to be the cheapest. Tesla hates the grid and nuclear power in general. In response, we don’t want Tesla to build more energy, but we want Texas to open the grid and energy market for new competitors to work their power options.

So — do you believe Texas is a perfect fit? Of course not. Texas is very interested in expanding its economy through the addition of businesses that cannot afford to be paid off by the grid.

Are Tesla and Texas a perfect match? It seems somewhat less likely to me.

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