By John Solari
Now that much of the dust has settled over the Tesla deal that will bring the world’s largest battery plant to Northern Nevada, one big questions remains — will the economic projections surrounding Tesla actually pan out?
The Governor’s Office of Economic Development has done a great job parsing the economic projections behind the Tesla jobs figures. But there are some interesting macroeconomic trends that are making the Tesla deal look better by the day.
Here is a brief recap of the economic multiplier that was used to project Tesla’s impact on Northern Nevada. Tesla is projected to create 6,500 direct jobs, all of them by 2018. Another 7,814 indirect jobs are projected from suppliers, distributors and other associated industries. Then, 8,402 induced jobs are estimated from the increased demand of this new workforce spending within the community. That totals 22,715 jobs.
There have been many questions about these calculations, and it should be reiterated that no projections are perfect in a fast-changing economy. But here are three reasons why Tesla’s economic multiplier projections are looking even more promising today than when the Tesla deal was approved:
1. Tesla may dominate solar storage
Much of the conversation around Tesla has understandably centered on electric cars, but Tesla’s ambitions are much greater than that. In partnership with SolarCity, the company has set its sights on a network of solar energy generation and storage that could mean sweeping changes to the energy industry. Tesla is developing battery technology that it hopes will become the centerpiece of both vehicle power and home energy across the nation.
As a Morgan Stanley analyst told Bloomberg recently, “We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost-reduction magnitude that Tesla might be able to achieve once the company has constructed its ‘giga-factory.’”
If Tesla’s battery technology becomes a supplement or alternative to nation’s electricity grid, as well as the dominate power source for electric vehicles, Northern Nevada’s gigafactory projections may have underestimated the long-term economic impact to the region.
2. A rebound in construction
3. The gigafactory’s eye-popping jobs figures may be conservative
Read the rest of John’s article at rgj.com.
John Solari is the managing partner of J.A. Solari & Partners. He has 25 years of accounting experience and is also a member of the American Institute of Certified Public Accountants and the Nevada Society of Certified Public Accountants.