Faraday Follows Tesla to Nevada for $1 Billion Auto Factory

  • Electric-vehicle startup picks North Las Vegas for plant
  • Company backed by Chinese billionaire hasn't built a car yet

Faraday Future, the electric-vehicle startup backed by Chinese billionaire Jia Yueting, plans to manufacture its first car in 2017 at a $1 billion factory near Las Vegas, company and Nevada officials said.

North Las Vegas prevailed over cities in California, Georgia and Louisiana as the site of California-based Faraday’s first manufacturing operation, which may break ground as soon as January. Rival Tesla Motors Inc. is building the world’s largest lithium-ion battery factory east of Reno after choosing Nevada over four other states.

“This solidifies Nevada as the place where the future of transport is happening,” the state’s economic-development director, Steve Hill, said Thursday on a conference call with reporters. “People throughout the globe, throughout the country, are talking about Nevada. This is an exceptional opportunity.”

Though automakers have struggled to find profits with electric models, Faraday has said it aims to make money not just on the vehicles but on subscriptions for applications and infotainment piped into the car. The company plans to unveil a concept car next month at the CES electronics show in Las Vegas. Yueting is founder and chairman of Leshi Television, a Chinese online video site.

Nevada is prepared to offer $215 million in tax incentives and credits over 15 years, including a total writedown of sales taxes, Hill said, subject to approval by the state Legislature.

Faraday expects to have 4,500 employees with an average wage of $22 an hour at the North Las Vegas factory, he said. The plant is expected to have a total economic impact of $85 billion over 20 years and generate $760 million in tax revenue during that period for state and local governments and schools, Hill said.

Electric Expansion

Faraday hasn’t revealed the name of its chief executive officer or identified its battery supplier. The company is the latest Chinese-backed startup to begin work on electric cars in the U.S. Along with Karma Automotive LLC and Atieva, Faraday has opened operations in the U.S. to take advantage of the country’s engineering and design knowledge, even as American consumers increasingly buy sport utility vehicles and pickups thanks to cheap gasoline.

The company, which has said it expects to have 500 workers by the end of this year, has hired about 60 former Tesla employees, according to their profiles on LinkedIn. Nick Sampson, senior vice president of R&D and engineering, and Dag Reckhorn, vice president of global manufacturing, both worked at Tesla. Faraday’s lead designer is Richard Kim, a veteran of BMW.

In 2014, Nevada Governor Brian Sandoval convened a special session to approve tax incentives worth as much as $1.25 billion for Tesla’s Reno factory. That legislation didn’t name Tesla specifically but applied only to companies that invest at least $3.5 billion in the state over 10 years. Faraday Future’s $1 billion factory wouldn’t qualify.

City’s Turnaround

The 3 million-square-foot (280,000-square-meter) factory would cement a turnaround for North Las Vegas, which was one of the country’s fastest-growing cities in the 2000s before the housing-market collapse nearly pushed it into insolvency. Its city council declared a fiscal emergency in 2012 and state officials considered putting the city into receivership.

North Las Vegas has been courting Faraday for its Apex Industrial Park, where medical marijuana growers have helped transform 2,000 acres (809 hectares) of vacant desert into a site with water and power lines suitable for development. Faraday would be the first industrial user on the site.

One marijuana grower operates there and 15 others are in various stages of permitting.

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