With its electric cars all over local roads, its sales and service centers springing up in new locations and its massive Fremont manufacturing plant looming beside Highway 880, Tesla is highly visible to Bay Area residents.
Now, for the first time, the Bay Area is getting a detailed look at Tesla’s economic impact on the region and the state from a report Tesla released Tuesday showing it is pumping billions of dollars into California’s economy.
Tesla commissioned the report, prepared by research firm IHS Markit. It says that during 2017, Tesla’s operations were directly responsible for $2 billion in California’s gross state product, and that figure grew to $5.11 billion when including what the company calls “Tier-1 suppliers” such as contractors working for Tesla that aren’t Tesla employees, Tesla supply chain providers, and the economic impact of Tesla upon other businesses across the state.
In the Bay Area, Tesla’s biggest impact is seen in the number of jobs the company has created. Alameda County, which is home to Tesla’s Fremont factory, claimed 5,081 Tesla workers as residents, while 5,737 jobs came from residents of Santa Clara County, 735 from San Mateo County and 352 hailed from Sacramento. The study showed Tesla having a total of 20,189 jobs in all of California, with another 31,424 jobs supported by Tesla operations across the state.
When asked about why Tesla commissioned the report, a company spokesperson said, “As one of the largest manufacturers in California, and the only remaining car manufacturer, 2017 saw Tesla generate more than $5 billion in economic activity within the state. We remain focused on trying to make a positive difference in California as we work to accelerate the adoption of sustainable energy.”
IHS also said that in 2017, Tesla had 10,601 Tier-1 suppliers, or contractors, working for the company. Tesla defines such workers as people who aren’t directly employed by Tesla, but work for the company at a Tesla facility. Of those Tier-1 suppliers, 1,049 were from Fremont, 4,427 from all of Alameda County and 2,243 from Santa Clara County.
According to IHS, Tesla paid $2.1 billion in wages and company equity to its California employees last year.
“These are impressive numbers and Tesla clearly has a positive impact on California’s overall economy,” said Tim Bajarin, president of San Jose-based tech research firm Creative Strategies.
The report on Tesla’s economic presence is impressive when considering where the company was less than a decade ago. In 2010, Tesla bought what was the New United Motor Manufacturing Inc. facility in Fremont after the plant, which had been jointly run by General Motors and Toyota, closed.
“When the NUMMI plant closed in 2010, the Fremont-based workforce and suppliers up and down the state felt the blow,” said Dorothy Rothrock, president of the California Manufacturers & Technology Association. “Now Tesla’s 20,000 workers, and more than 30,000 jobs supported in the economy, demonstrate how much California’s middle-class workers would benefit if we focus on attracting and growing manufacturers in California.”
Tesla put more than $3 billion into modernizing the factory, and rolled the first Model S off the plant’s assembly line in 2012. The company now produces the Model S, the Model X and the new Model 3 sedan in Fremont. The Model 3, in particular, has been in the spotlight as Tesla is ramping up production on the sedan, with a goal of producing 5,000 such vehicles a week by the end of June. In April, Tesla shut down production in Fremont for several days in order to prepare for more Model 3 production.
In some respects, the future of Tesla is seen as tied to the Model 3, which is Tesla’s first foray into the non-luxury electric car market. Tesla has said the Model 3 will soon come with a sticker price of $35,000, which while it may still seem high, is relatively inexpensive compared to the typical $70,000 to $100,000 price tags associated with the Tesla Model X and Model S.
“Tesla has become an important economic engine in California, and has a large ripple effect (across the state),” said Efraim Levy, an analyst who covers Tesla for CFRA Research. “Even those who own Tesla stock are looking for the company to be either amazing, or blow up. And the ramifications for California could be huge either way.”