Tesla, EV companies shape economy of Kyle, Central Texas

Oct 11, 2023
Justin Sayers – Staff Writer, Austin Business Journal

Tesla’s massive wake is not only felt in the Austin area, where the manufacturer has planted its headquarters and a gigafactory. Its impact stretches much farther, including south toward San Antonio.

Elon Musk's electric vehicle company plans to lease hundreds of thousands of square feet of warehouse space in the small city of Kyle and has already done so in San Antonio itself. Meanwhile, two automotive companies that are reportedly Tesla suppliers, Simwon North America Corp. and Plastikon Industries Inc., have set up shop in Kyle.

Central Texas and Atlanta are the two hottest EV markets in the country outside Silicon Valley, according to Daniel Ives, a well-known technology analyst with Wedbush Securities who has Tesla in his portfolio.

"I think it's going to continue," he said. "It's a massive shift, and it's really a tidal wave that's coming to Austin. We see this lasting for the coming years — that's really going to be a boom in engineering, marketing and even factory employment. It's starting in Austin but I think it's going to spread throughout the San Antonio corridor."

Jason Shawhan, director of manufacturing at Tesla's Austin-area gigafactory, recently shared that the company had surpassed 20,000 employees at the facility — and said the headcount could triple in the coming years. He shared an image during a September event held by the Austin Regional Manufacturers Association that indicated hundreds of employees came from communities such as Kyle, San Marcos and New Braunfels.

Tesla is certainly attracting companies to the region. But experts said that's not all. Austin has long been known as an engineering hotbed, with a regular supply of University of Texas grads.

Ed Latson, CEO of the Austin Regional Manufacturers Association and incoming Opportunity Austin CEO, said the area is "advantageous for electric vehicle companies" because of proximity to other businesses, lots of available land and a friendly business environment.

He said he expects "a lot of growth in the automotive sector" in the region. He thinks there will even be a super-regional effect, stretching up I-35 to the General Motors Co. plant in the Dallas area and a planned Tesla factory in Mexico.

The EV transition doesn't just affect major manufacturers. XCharge North America, which makes EV charging equipment and has adopted Tesla's charging standard, recently opened a facility in Kyle.

Kyle Mayor Travis Mitchell said a location along major transportation routes, accessibility to both Austin and San Antonio and proximity to major companies have been selling points for his community.

"Folks want to be near the gigafactory," he said. "That has made a big impact. We're close to I-35, close to the airport. I would say the same reason that brought Tesla close by has also brought the suppliers."

A challenge among the rush of new companies is ensuring that infrastructure isn't too strained by growth.

"But those businesses coming to the area are part of how we fund the properly sized infrastructure in the first place," Mitchell said.

This area does have some history with automotive production. Toyota Motor Corp. produces trucks at a San Antonio factory that opened in 2006 and has a supply chain that stretches into the Austin area and beyond. And Germany-based Continental Automotive last year opened a $110 million manufacturing facility in New Braunfels that will make components for assisted and automated driving and employ hundreds.

On the north side of the Austin metro, Ayro Inc. makes low-speed EVs in a Round Rock factory. CEO Tom Wittenschlaeger said he's noticed an uptick in companies coming to the region to "provide constituent pieces to electric vehicles" — things like batteries and frames.

Ayro already exemplifies how a single company's supply chain can have a wide-reaching impact. It sources from businesses from Ontario, Canada, through Michigan and Indiana, all the way south to Mexico, essentially along a line through the middle of the continent.

"It's a straight line and it's basically a day and a half in an 18-wheeler," Wittenschlaeger said. "All of those reasons make Central Texas particularly attractive, along with a really good workforce, a workforce that has a really good work ethic. Texas just sits in a really good spot and enjoys a very good environment, both at the state government level and the local government level."

He said he would be shocked if more companies didn't leave states with reputations for being anti-business and move to places like Texas, Florida and Georgia.

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