Pima County greenlights land lease for $1.2 billion battery cell factory

Pima County has entered into a lease agreement with a battery cell maker that is expected to bring in $1.2 billion in spending to construct a factory in Tucson along with 1,000 good-paying jobs over the next decade.

The Board of Supervisors voted 5-0 on Tuesday to welcome American Battery Factory to Tucson with a 5-year lease worth $23 million. The Utah-based company said it plans to invest $1.2 billion to build a plant and pay employees an average of $65,000. The county also forecast a $3 billion “economic impact” over the next 10 years.

The factory will be built south of the Raytheon facility on what is now a vacant 267-acre parcel of the Aerospace Research Campus, near Tucson International Airport. American Battery Factory calls themselves the first battery cell factory in the U.S. to make lithium iron phosphate cells.

The company will have the option of buying the land at market rate but only 30 months after the lease is done. The county describes the planned complex as a “gigafactory.”

The agreement came ahead of plans by the Scion Power Corp, a Tucson-based battery maker, to double the scale of its electric vehicle battery manufacturing in the company's hometown. The company expects to create another 150 jobs in Tucson and a $341 million economic impact locally during the next 5 years with a 111,400-square-foot facility that will be complete by 2026.

American Battery Factory CEO Paul Charles told the county board that his company was looking for a place to make battery cells that are critical, most of all, for electric vehicles.

“In order for the EV, electric vehicle revolution to really occur, you need to have an optimized and stable grid,” Charles said.

Battery cells are metal casings that batteries are put into and that can be used to store and generate an electric charge, and they’re “key ingredient” to battery production and storing renewable energy, Charles said. The company produces cells that also support commercial and retail-use batteries,

Aside from just electric vehicles, “in order to use renewable energy, you really need batteries” to store generated energy, Charles said, which makes the battery cells important for large-scale renewable energy use.

He described the job of making battery cells in the U.S. as “quite daunting” because of the environmental impact it can have. However, he assured the board that “the chemistry” behind the cells “is quite safe and that his company wants “a clean, safe environment.”

He also told Supervisor Adelita Grijalva, who asked about how much water the plant will use, that all “rapid waste” produced by the factory will be recycled. No wastewater will be produced besides “simple sewage,” Charles said, and the factory will use “an incredibly small amount” of Tucson Water.

“This is a showcase of clean and green, truly,” he said. “We want to make sure that as new technologies come on board, that we’re able to implement it with them as well.”

The lithium iron phosphate metals that American Battery Factory makes are also considered safer, the longest-lasting and most reliable and eco-friendly material for making batteries, especially compared to lithium ion batteries, according to the county.

Lithium iron phosphate is considered “typically more environmentally sound because they do not contain nickel or cobalt, the supply chains for which are heavily reliant on extractive industries,” according to a county press release.

Supervisor Steve Christy, the lone Republican on the board, was the only one to bring up World View Enterprises, a company that says it still plans to launch in space tourism balloons that was part of one of the last big economic development leasing agreements with the county.

The county’s dealings with World View became a legal issue after the Goldwater Institute filed a suit claiming that their lease agreement violated Arizona procurement laws. Pima County ultimately won the suit, but a state Court of Appeals ruled in October that the deal actually violated the state Constitution’s “Gift Clause.” World View's operations have fallen well short of the lofty employment forecasts that the company and county used to justify spending taxpayer money to construct a facility, Tucson Sentinel investigations have shown. The county recently re-negotiated its agreement with the new management team of that company.

“I would hate to see somebody like the Goldwater Institute come back six months from now, a year and half from now and say ‘you didn’t dot an I and cross a T here,’” Christy said. “It might be more reassuring if the companies that might challenge this were brought in or consulted."

However, Christy came around to voting in favor of the factory after the Deputy County Attorney Sam Brown assured him it was reviewed as legal. Christy even told Charles, “welcome to Pima County” once he felt confident about lease agreement’s legality.

Unlike the World View deal, the agreement with American Battery Factory calls for the company to pay for any construction. Pima County will collect rent on the property, and provide some job training support.

'What Americans can actually do'

Charles said the new Tucson factory is part of an effort by his company to bring their manufacturing back to the U.S., saying that continuing to make battery cells in China has become “ a national security threat” to the county board.

Charles told the supervisors that American Battery Factory had narrowed down the location where they wanted to build to 12 locations and then picked out just two.

“Ultimately, it came to people, the quality of life and the progressive nature of the people that are here,” he said.

Other states offered “more money, more incentives, free dirt, incredibly inexpensive power,” he said, “but at the end of the day, we view that as a generational opportunity for our company.”

“As we become adopted by this family here (in Tucson), we can make an impact at every level of the citizenry here,” Charles said. “So it’s very important from that perspective.”

The CEO also described the life he once had in Arizona, saying that he raised his three children in the state and volunteered as a Boy Scout master for six years.

“We’re humbled that you have considered allowing us to be part of the Tucson family here,” he told the county board. “This is kind of a homecoming for me.”

Charles also told the board that his company plans to make the factory a “showcase” to foreign companies of “what Americans can actually do, given the opportunity and the resources.”

American Battery Factory is a “spin out,” as Charles described it, of Lion Energy, which specializes in energy storage for commercial and residential solar generators and electric vehicles.