Waller County, Texas, has approved a tax abatement deal that will enable Tesla to establish its latest battery storage factory in the United States. The agreement was finalized during a meeting of the Waller County Commissioners Court on March 5, 2025. Following a brief discussion, which included input from Tesla’s engineering lead, Shiv Mysore, the commissioners unanimously voted in favor of the tax incentives.
Tesla will lease land in an industrial park from SRPF B/Empire West Phase II, located within a designated reinvestment zone. Currently, the property is occupied by a third-party logistics company. As part of the first of two abatement agreements, SRPF B/Empire West Phase II is expected to invest approximately $44 million in improvements to the manufacturing facility, enhancing its electrical grid connection and heating and cooling systems. Concurrently, Tesla plans to invest around $150 million in manufacturing equipment.
Under the second agreement, the property owner will construct the manufacturing facility at an estimated cost of $31 million, while Tesla will contribute approximately $2 million for distribution equipment and upgrades to the HVAC systems.
Commissioners expressed enthusiasm about the project, which is projected to create around 1,500 advanced manufacturing jobs in the region. This includes over 100 positions with salaries exceeding $100,000 annually and more than 1,000 jobs offering salaries above $50,000. However, the approval is contingent on both parties reaching a similar agreement with the city of Brookshire, where the factory will be located. If Tesla or SRPF B/Empire West fails to secure this agreement, the tax abatement will be rendered void.
CEO Elon Musk has indicated that Tesla aims to accelerate production of its stationary battery storage solutions. During a recent earnings call discussing the fourth quarter and full-year 2024 financial results, Musk hinted at the construction of this third plant, following the initial factory in Lathrop, California, and the new facility in Shanghai. Tesla refers to these plants as “Megafactories.” In his presentation to the Waller County Commissioners Court, Mysore shared a promotional video showcasing the Lathrop factory, explaining that the Texas Megafactory would mirror its design and capabilities. The Lathrop facility has an annual production capacity of 40 GWh.
In its 2024 report, Tesla noted that it deployed a total of 31.4 GWh of large-scale Megapack battery energy storage system (BESS) units and residential Powerwall systems globally over the past year. For context, this figure is slightly lower than the 34.4 GWh forecasted for cumulative installations within the U.S. by research firm Wood Mackenzie. However, it is significantly less than the 110 GWh of battery shipments for energy storage system applications made last year by Chinese manufacturer and Tesla supplier CATL, according to data from SNE Research.
The development of the Texas Megafactory comes after Tesla relocated its headquarters from California to Texas in 2021. Additionally, in February, the company signed a Memorandum of Understanding (MoU) with the Western Australian government to establish a battery remanufacturing facility.
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