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California City Hopes to Attract Tesla Auto Plant

December 01, 2009

DOWNEY, CA --- The Downey City Council on Nov. 25 approved a preliminary deal that could help bring electric vehicle manufacturing to Southern California, the Los Angeles Times reported.

Council members in this Los Angeles County city agreed to a memorandum of understanding with Industrial Realty Group, which manages an 80-acre parcel where Tesla Motors Inc. is considering building an electric-car manufacturing plant. The site is currently used for film and television production.

According to the memorandum, the city will provide $8.7 million in incentives to help Industrial Realty Group negotiate a lease agreement with Tesla, the Times reported.

The city estimates that such a plant could create 1,200 to 1,500 jobs. Tesla has been searching for a location to build its all-electric Model S sedan. The car is expected to go into production in late 2011.

A Downey spokesman told the Times that passage of the memorandum by the Downey City Council was necessary to make the deal possible between Tesla and Industrial Realty Group (IRG). The city owns 20 acres of the 80-acre site. Under the agreement, IRG doesn't have to pay the city for leasing the land for 15 years, which amounts to about $7 million. The remainder of the $8.7 million in economic incentives includes fixing up the site.

The U.S. Department of Energy, which has given Tesla $465 million in low-interest loans to build the Model S vehicle, still needs to review the leasing agreement before any deal can be finalized, the Times reported. 

In fact, the deal is far from a certainty. Tesla has previously abandoned plans to open plants in both San Jose, Calif., and Albuquerque, N.M. 

Tesla Motors is headquartered in San Carlos, Calif.

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