Nevada won the fierce, five-state competition to host Tesla Motors’ planned $5 billion battery factory by offering a package of tax breaks and credits that could be worth $1.2 billion over the next 20 years, according to terms released by state officials Thursday.

The deal, announced by Gov. Brian Sandoval and Tesla CEO Elon Musk in Carson City Thursday, requires the approval of Nevada’s Legislature. Sandoval said Tesla’s “Gigafactory” would bring the state $100 billion in economic benefits over the next 20 years, create 22,000 direct and indirect jobs and “change Nevada forever.”

In return, Tesla won’t have to pay sales tax for 20 years. The company also won’t have to pay real property, personal property and modified business taxes for 10 years.

“I know that many of you are asking yourselves the same question: ‘Is this agreement good for us?’ I can answer that today, and say emphatically, ‘Yes, this meets the test,’ ” Sandoval said.

Tesla plans to build the factory, which will double the world’s current production of lithium-ion batteries, at an industrial park just east of Reno. Construction is expected to create 3,000 jobs, while Tesla projects the factory itself will employ 6,500 people at full production. The factory’s massive scale will cut the cost of batteries by at least 30 percent, according to the company. That’s key to Tesla’s plan for a $35,000 electric car created for middle-class drivers.

“The Gigafactory is an important step in advancing the cause of sustainable transportation and will enable the mass production of compelling electric vehicles for decades to come,” Musk said Thursday.

The announcement capped months of competition among five states vying for the project - California, Arizona, Nevada, New Mexico and Texas. And while Nevada landed the prize, a Tesla spokesman said Thursday that the company would continue evaluating sites in other states.

In part, the company wants a backup location in case Reno develops “unforeseen problems,” said Tesla spokesman Simon Sproule. In part, the company wants to scope out sites for a second Gigafactory, if Tesla continues to grow.

“Gigafactory No. 1 is not the end of it,” Sproule said. “If you expect the company to grow - which we do - ultimately, you’ll need more than one Gigafactory.”

The five-state competition drew in political heavy hitters, such as Texas Gov. Rick Perry and U.S. Senate Majority Leader Harry Reid of Nevada. Each state assembled its own package of incentives, with California offering tax breaks and an expedited environmental review. Tucson sent Tesla a pre-approved building permit with the address left blank.

California’s bid was worth roughly $500 million, according to one of the state legislators involved in the process. Tesla executives said they expected the winner to offer incentives worth roughly 10 percent of the project’s total cost, or $500 million.

In addition to Nevada’s proposed tax breaks, Reno offers a prime location hard for other states to match.

The Tahoe Reno Industrial Center, where Tesla broke ground in June, lies just four hours up Interstate 80 from Tesla’s Fremont auto plant. Rail links connect the two as well. A flight from the Bay Area to Reno takes less than 60 minutes. Some of the California sites suggested for the Gigafactory - such as the Coachella Valley, near Palm Springs - aren’t as accessible.

Nevada also offers open land and a growing supply of renewable power from wind farms and geothermal plants. Tesla CEO Elon Musk wants the Gigafactory to use as much renewable energy as possible, perhaps even generating some of its own.

Nevada boasts America’s only operating lithium mine, producing the raw material for Tesla’s batteries. And the state has no corporate income tax - an obvious draw.