Gov. Arnold Schwarzenegger and state Treasurer Bill Lockyer worked out the deal for Tesla Motors Inc. after learning that the Silicon Valley-based company intended to build its second-generation vehicle in New Mexico.

The financial break, announced Monday, allows Tesla to avoid paying state sales tax on equipment it buys to build its Model S. That will save the company 7 percent to 9 percent on each purchase.

The five-passenger sedan is expected to cost about $60,000 and will be able to travel 225 miles between charges to its electric engine.

Schwarzenegger says it drove him "absolutely insane" to learn Tesla planned to take its environmentally friendly technology to another state.

The governor is among several celebrities who have ordered Tesla's first-generation electric sports car, the Roadster, which has a base price of $109,000.

The car goes from a dead stop to 60 mph in just under four seconds and tops out at 125 mph. The roadster takes 3 1/2 hours to recharge when its batteries are depleted.

The cars started arriving this spring at Tesla's first dealership, in the Westwood neighborhood of Los Angeles. Schwarzenegger is awaiting delivery.

Tesla's decision to remain in California is unfortunate, said Fred Mondragon, secretary of New Mexico's Economic Development Department. He said several European companies are eager to take advantage of New Mexico's economic incentives for companies that develop clean energy.

—Juliet Williams, Associated Press Writer

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Report: Fiber Internet adds more subscribers worldwide than cable

NEW YORK (AP) — For the first time, more people around the world are signing up for fiber-optic broadband service than for cable Internet service, according to a British research firm.

Fiber providers added 4.2 million customers in the first quarter, while 2.5 million customers signed up for cable modems, according to a report released Wednesday by Point Topic.

The bulk of the new fiber subscribers are in China, where 2.5 million signed up, for a total of 16.7 million. The U.S. is in fourth place after Japan and Korea. Point Topic counted 303,000 new U.S. fiber customers, for a total of 2.6 million.