How Tesla Will Help Texas & How Texas Will Help Tesla

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During the Tesla earnings call yesterday, Elon Musk made the announcement that Tesla has chosen Austin for its next gigafactory, or perhaps terafactory. Giga Austin/Giga Texas will create the Cybertruck, Semi, Model 3, and Model Y. Austin Mayor Steve Adler highlighted three ways in which this helps east Austin. These primarily focused on jobs and an economic boost in Austin but also promoted fairness for everyone.

@Tesla moving to Austin is exciting. It gives us three things we need in east Austin. 1/3

— Mayor Adler (@MayorAdler) July 22, 2020

This new opportunity will help our city be more fair for everyone who lives here. I look forward to working on and resolving the issues leading to final city approval. 3/3

— Mayor Adler (@MayorAdler) July 22, 2020

He’s also stated that he will be Tesla’s team player when it comes to resolving issues that could lead to final city approval. Tesla is bringing in “thousands of good wage jobs that don’t need a 4-year degree,” he noted. The mayor also highlighted Tesla’s sustainability goals. “Its factory will be better for people and the planet,” he said in one of his tweets.

When Elon Musk spoke about the Austin Gigafactory, he shared that Tesla wanted to make it an ecological paradise that is open to the public. There will be boardwalks and trails near the Colorado River, and the factory will be massive. The new factory will help take some of the burdens off of the Fremont factory by building Model 3 and Model Y vehicles, and the Fremont factory can focus on Model S and X vehicles.

Tesla Stands To Benefit From A Texas Factory

Being from Shreveport, Louisiana, I grew up hearing all about Texas trucks — “the best trucks you could buy.” They weren’t the best trucks in the eyes of people in this area because of who the automakers were, necessarily, but because they were made in Texas. Shreveport is in the northwest corner of Louisiana and is in an area known as Ark-La-Tex — so we got a lot of Texas marketing. There’s a longstanding joke that Shreveport is really in Texas, not Louisiana. In any case, the idea that Texas had the best trucks was pretty prevalent when I was a child.

Texas, known for its wide-open spaces, is home to several automakers, such as Peterbilt Motors, which produces semi trucks, and a General Motors assembly plant in Arlington. According to a 2013 study on the Texas Automotive Industry, Texas ranked #6 nationally for automotive manufacturing jobs back then. We could not find a more recent ranking on this, but we did find these additional stats on the Texas auto industry in the past couple of years:

“Manufacturers in Texas account for 12.98% of the total output in the state, employing 7.09% of the workforce. Total output from manufacturing was $230.45 billion in 2018. In addition, there were an average of 908,000 manufacturing employees in Texas in 2019, with an average annual compensation of $87,809.19 in 2018.”

Additionally, there were 17,522 auto manufacturing firms in Texas in 2017.

Other Highlights From The 2013 Study

The Texas-Mexico Automotive Corridor

The 2013 study also covered the Texas–Mexico Automotive Corridor. The study noted that Texas serves at a primary link between Mexico’s auto plants and the rest of the U.S. auto industry. Billions of dollars of automotive goods are shipped from Texas annually and it has become a key part of the “North American Auto Alley,” which runs from Mexico through several U.S. southern states and into the Midwest.

Several foreign-owned automakers — such as Nissan, VW, Mercedes-Benz, and BMW — have located their operations in these states along the U.S./Mexico border. The 1992 North American Free Trade Agreement (NAFTA) also boosted Texas as a primary link between Mexico’s automotive plants and the rest of the U.S. automotive industry — creating a “NAFTA Superhighway.” This superhighway runs through Texas as Interstate 35 and serves as the main corridor for the southern U.S. and northern Mexico auto manufacturing industry.

The location places Tesla in a key spot where not only can it benefit as a job creator, but its location is within a state that is known as a major player in the auto manufacturing industry.

Earlier this year, CleanTechnica’s Paul Fosse analyzed the idea of a Tesla gigafactory in Mexico. When Elon Musk asked on Twitter if Giga Texas made sense, someone made a comment about Mexico’s tariff-free access to South America. Both Texas and Mexico would solve different problems, but what’s clear is this is a hotspot of automotive manufacturing, and that includes the various support industries and companies. Indeed, Tesla could later on set up a gigafactory in Mexico, and there may be some benefit — in terms of logistics or partnerships, for example — to having two factories in the same corridor.

The Texas Pickup Market

Keeping in mind that this 2013 study is 7 years old, it does still provide some not-too-distant historical perspective on the Texas automotive industry. In 2012, Texas accounted for 16% of the nation’s new, full-size pickup market. It’s an ideal place to build the Cybertruck. Tesla’s brand is coveted by customers all over the globe, but as it grows, it needs to reach (and is reaching) new markets. Targeting people who would buy trucks, it makes sense to build the rugged Cybertruck in the heart of truck country.

The table on the right gives us a snapshot of the pickup truck market in Texas alone. In a span of three years, there were almost 15 million pickup trucks registered there. They represented 22.5% of the state’s registered vehicle total. Almost one out of every 4 people buying a new vehicle was buying a truck.

Heavy-Duty Trucks

Tesla will also be producing the Semi in Texas, which is home to several heavy-duty truck manufacturers:

• Peterbilt Motors.
• Supreme Corp. of Texas.
• RKI, Inc.
• Capacity of Texas.
• Morgan Corporation.
• Terex Utilities.

In the five years analyzed for that report above, 559,342 semi truck reservations were made in Texas. This shows that there is also a major market for semi trucks in Texas.

Tesla Crosses Borders & Crosses Cultures

Mayor Adler has it right: Tesla coming to Texas will benefit the state. However, Tesla also benefits from the robust automobile manufacturing, especially truck manufacturing, business ecosystem and culture in Texas.

Whereas Tesla has long been known as a California automaker, it will soon be a California and Texas success story — a truly unifying American success story.

Tesla Cybertruck photos by Kyle Field/CleanTechnica