By on September 15, 2014

Elon Musk and Brian Sandoval

A week after the announcement, and through two days of deliberation by the state legislature, Nevada governor Brian Sandoval signed into law September 11 the $1.25 billion tax package that won over Tesla enough to bring its Gigafactory to the Silver State.

Reno Gazette-Journal breaks down the complete package as follows:

  • $725 million: 20-year, 100 percent sales tax abatement
  • $332 million: 10-year, 100 percent property tax abatement
  • $120 million: Transferable tax credits
  • $75 million: $12,500/job transferable tax credits (up to 6,000 jobs)
  • $27 million: 10-year, 100 percent modified business tax abatement
  • $8 million: Discounted electricity rates for eight years

In addition, the state will buy Tahoe Reno Industrial Center’s main road, the USA Parkway, for $43 million, and will extend the road to U.S. Highway 50 at a cost yet to be determined.

Finally, the legislature had to agree to give Tesla and other EV manufacturers the right to directly sell their wares to customers in Nevada without going through the traditional dealership model.

In exchange, Tesla will provide $7.5 million annually to the state for education funding over the next five years beginning in 2018, as well as invest $3.5 billion in manufacturing equipment and real estate in Nevada.

Meanwhile, the insurance and film industries lost on their respective tax incentive programs as funds were siphoned into the Tesla deal. The former loses a $27 million/year credit that had been a mainstay for 40 years; the latter sees a hard-won $80 million/year credit meant for movie production over the next four years reduced to just $10 million/year.

As for economic impact, the state expects $100 billion over the next two decades, ranging from 6,500 employees making $25/hour assembling the battery packs meant for all of Tesla’s vehicles and others interested in them, to a 4 percent increase in the state’s gross domestic product.

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42 Comments on “Nevada Governor Signs Tesla Tax Package Into Law...”


  • avatar
    Jerome10

    Must be nice to be a trendy car company… The rest of the Nevada citizenry can open their wallets.

    I also enjoy that the bribe was disguised as an education donation. Can’t be against it if it’s for the children, right?

  • avatar

    I’m against corporate welfare in general, but if it supports clean energy I think it a wise investment.

    • 0 avatar
      DeadWeight

      I always had thought that in order to scale up a project like this, that involves massive manufacturing operations and the purported future hiring of thousands of employees, that the product that the facility/facilities would be manufacturing would be a known quantity, with a specific & positive track record, possessing qualities at least as good, if not superior to, competing products and technologies of competitors.

      I was further under the impression that should taxpayers be essentially forced to cover a large % of the capital outlays for construction of such facilities, by their esteemed elected representatives, there would be adverse and long-standing consequences for those in positions of power who handed out hundred million dollar plus tax breaks for what ultimately turned out to be state investment in companies that were actually pursuing & promising illusory goods/technologies.

      I was naive back then, and thought government (i.e. taxpayer) backing of companies such as Solyndra, A123, Abound Solar, etc., or similar companies that would default on their loans to tax payers, would carry career risks for politicians & regulators.

    • 0 avatar
      stuki

      And I’m against things the man on TV says is bad, but not if he says it’s good…

    • 0 avatar
      TomHend

      Belief in US Federal Reserve omnipotence is going to end very, very badly……….

      • 0 avatar
        VoGo

        Just look at the absolute mess the US Federal Reserve has already created. The greatest prosperity to the most people in the history of the human race — who wants more of that?

        • 0 avatar
          highdesertcat

          I’m surprised that you would make such a statement! It shows an amazing disregard for all things economic and financial.

          Obviously you have never been in a position where hard decisions had to be made, like life or death decisions, in this case a nation, America.

          Ben Bernanke WAS in such a position and he bit the bullet, made a highly unpopular choice between necessary evils of which remedy to apply to America’s economy and financial system, in spite of several members of academia who were part of this current failed administration.

          It’s a good thing for America Bernanke did not work for Obama and didn’t have to mind him.

          In Europe’s Eurozone they tried all sorts of different approaches, including austerity, self-denial, financial self-abuse and whatnot, only to see their approaches tank their economies. Yes, I have heard stories from family that lives there.

          Now the Eurozone is going to try it America’s way by having their Central Bank deal out the handjobs selectively.

          So this vindicates Ben Bernanke’s unpopular decision.

          I was against the Bernanke-approach myself, but all that matters is the results. Yeah, many of us are worse off than we were before.

          Many are much, much better off in America living on welfare with money for nuttin’, foodstamps and cellphones for free. That’s what America’s majority voted for! That’s the new America. Suck it up and deal with it!

          What really matters is that America is quickly regaining its economic crown, especially with the recent demise of China.

          But America will be in deep sh!t if China decides to cash in that $1.3TRILLION in American IOUs they are holding.

          Then it is time to fire up the money-presses to work round-the-clock, 24/7, and then a loaf of bread will cost $5, a gallon of gasoline $10, and a jug of milk $15.

          By then we can forget about Beef, Pork or Chicken and will feature Soylent Green wafers instead.

        • 0 avatar
          stuki

          Since, after all, whatever prosperity any American may enjoy, derives solely and entirely from the printing of George Washington’s likeness on pieces of paper, then handing the paper to guys at Goldman Sachs to spread around.

          Anyone who doesn’t even understand that, must never have been blessed with the greatest publicly funded education by the greatest unionized teachers in history, that’s for sure. Damn ignoramuses.

          • 0 avatar
            VoGo

            What is the origin of all this hate? It’s like we live in two completely different Americas. I live in a country where people have the freedom and resources to get educated, pursue careers, have families, and care for others.

            I don’t know where you people live will all this negativity, but I wish you well.

          • 0 avatar
            stuki

            The America where “educated” does not mean horded together like cattle behind barbed wire and metal detectors? And “carreer” is not flipping burgers or clipping the toenails and sucking off some Goldmanite? And where “family minded” women are not simply codeword for banged up old jalopies having hit the wall and are barely even fertile anymore? And where the simple act of lending someone your bicyle for a short trip to the store, does not turn you into a legitimate target for some lawyer on the make, should the kid you lent it to ride like a moron and crash?

            Or perhaps just the one where none of that really matters, as long as Saint Gommiment force our neighbor to pay for our Prozac prescription, and the man on TV says we are the happiestest peoples in the whole wholest world..

          • 0 avatar
            Charliej

            If you don’t like how things are, change them. I worked for a nationwide corporation for ten years, from the late seventies to the late eighties. I got tired of their bullshit and left. I started a company and my wife and I worked for ourselves for twenty seven years, until we retired. You don’t have to follow the herd and work for others. You can take control of your own destiny and make your own decisions about how you will live. Being pissed that things are not how you like them is not a winning move. Taking control of your future is a winning move, maybe. You will have to work much harder than you would work for someone else. When you are your boss, you must do what has to be done, if you wish to prosper. No one else is going to do it for you. Maybe you don’t have what it takes, but you won’t know if you don’t try. If you still don’t like what is happening in the US, leave. That is what I did. When my wife and I retired, we sought a place where we could live in comfort and be away from the people we had to deal with for the last three decades. It is a big wide world. There is a place for everyone, except totally negative people who would not be happy no matter what they were given. Which are you? Are you just a whiner who will do nothing to make his life better? Or, are you a take charge type of person who will work hard and make a future for yourself and your family?

  • avatar
    mikey

    I’m also against corporate welfare in general, but if it supports keeping thousands of people in a job, I think its a wise investment.

    I’m sure many of the B&B also have a view, on when “corporate welfare” may be justified, or not.

  • avatar
    ellomdian

    I’m always amused when states throw HUGE amounts of money at businesses to lure projects into them, without really appreciating how much control you are giving to a single corporate enterprise over long term. If you live in a state that has a significant aerospace presence, you are probably already aware how much of a sacred cow it becomes in budgetary discussions.

    It seems like a lot of legislators prefer the “make up for loss on units in volume” approach…

    • 0 avatar
      bosozoku

      Lockheed builds the ultimate sacred cow boondoggle, the F-35, in my backyard. You will hear ne’er a negative thing said about that the JSF program or it’s porky greed spoken by a politician around here, be they federal, state, or local.

      • 0 avatar
        DeadWeight

        The F35 is really a tragic, historically significant mistake in implementation.

        They have a newly discovered problem with it now; its P&W engines have cut out completely and repeatedly during high thrust rolls in an in-service plane.

        • 0 avatar
          stuki

          The Government is the real tragic, historically significant mistake. JSF is just one tiny example of that.

          • 0 avatar
            DeadWeight

            It’s just that it’s idiotic that they even tried to make a one size fits all aircraft for all branches of the military, that’s now turned out to be a flying pig (in more ways than one).

            I expect corruption and incompetency from my government, but this is ridiculous even by their usual smutty standards.

          • 0 avatar
            VoGo

            No, the mistake was to make the F35 and F22 in the first place. The US already owns the skies, and will for another decade or two.

            We are quickly approaching the point when fighter aircraft are extinct, replaced by drones that eliminate the need to move a human at 3X the speed of sound equipped with enough munitions to kill the enemy trying to do the same.

            Five years from now, our enemies will have cheap (as in $120K, not $120M) drones that can easily take out the F35. This program is our Maginot Line.

  • avatar
    SCE to AUX

    I’m not in favor of ‘buying’ the jobs, or the reduced electricity rates, but the tax abatement part is something all corporations should receive everywhere.

    It’s plain that high corporate taxes only encourage companies to move elsewhere. But unfortunately, it’s small businesses (the backbone of America) that cannot do so.

    • 0 avatar
      stuki

      For politicians, and high profile CEOs in their circle of friends, the goal is making outcomes dependent on special deals only they can grant, rather than plain, simple, unimpeded competition.

      If you’re a politician, or someone already famous and connected, “may the best man win” is much riskier and less lucrative than “may the best connected man win.”

  • avatar
    Master Baiter

    Given the net positive economic impact, I don’t see why the tax breaks to the movie industry would need to be cut. There should be MORE revenue flowing to the state after the factory is built. Reminds me of the bogus argument that some make saying tax cuts somehow need to be “paid for.”

  • avatar
    CoreyDL

    That governor man looks like an actor.

  • avatar
    ClutchCarGo

    I still think that these deals should include an equity stake for the state, or at least ownership of the physical assets to help ensure that the receiving corp delivers on their promises.

    • 0 avatar
      VoGo

      State ownership of the means of production, huh? Karl Marx would be proud.

      • 0 avatar
        Xeranar

        Technically the form Clutch defined is simply capitalism with the state acting as a normal investor in a capitalist system. It’s easy to confuse because most Americans have an uneducated understanding of socialism and for that matter Capitalism. But all that Cluth described is Capitalism, in fact the very act of giving away tax receipts to corporations is part of Capitalism at its core.

  • avatar
    schmitt trigger

    Governor Sandoval appears to be saying to Mr Musk:
    “If you are going to screw me, at least kiss me first”.

    • 0 avatar
      DeadWeight

      Sandoval will be long gone and in some very lucrative gig in the private sector (Financial-Media-Military-Industrial-Banking-Government Contractor) by the time this “concept” is even remotely close to getting started, if it ever does (there’s a reason why Nissan is closing EV battery facilities as of late).

      It’s the taxpayers that Musk should be buying a free drink or two for.

  • avatar
    jim brewer

    I bet The education “credits” are the people that get sent to seminars or the University of Phoenix for this and tha. Probably spread over 10 or 15 years. Basically, an illusory press release benefit. Just a guess.

    Another press release feature is the astonishing 20 X multiplier effect of this investment, all in the state of Nevada alone. The highest multipliers I ever heard of are in the 5 X range. It so happens that the cost of the Medicaid expansion of O-Care in Nevada is slightly larger. So does that mean there’s going to be 200 billion dollars of extra economic activity in Nevada alone between O-care and Elon Musk? OK it’s gummint spending. Let’s assume a measly 10X multiplier. 150 billion in new economic activity in Nevada? Remember, this is a state with an annual budget just a little over 5 billion. My point is that these economic projections reported in the newspaper don’t pass the laugh test. They are pure, unadulterated bullshit.

    The gigafactory will supposedly cost Tesla $5 billion, but the first phase is 3 billion. What are the clawbacks if Tesla doesn’t come through? You notice there’s no mention of that. Remember, if Tesla goes belly up, a distinct possibility, given the riskiness of the venture, it won’t even matter if they have clawbacks.

    P.S. Here’s another word for “transferrable tax credits” It’s called “cash”

    • 0 avatar
      EchoChamberJDM

      “If” Tesla goes belly up? You should say “when”. This reminds me exactly of another car: environmentally friendly, alternative energy powered, high priced and high performance to match. Led by genius visionaries who would revolutionize the industry. Visionaries who said that cars powered by gasoline were inherently unsafe and prone to catch on fire. A company that was going to put all the other car companies out of business.

      Anyone remember the Stanley Steamer?

    • 0 avatar
      highdesertcat

      Excellent comment jim brewer. I would have liked to see this venture come to my state, New Mexico, because of those 6500 jobs. We tried in the State Legislature but the Governor was not able to make it happen. Her opponents simply yielded too much clout.

      My guess is that Nevada is betting all this positive spin will attract lateral investment and new business to Nevada in anticipation of the spin-off benefits the actual opening of the plant will bring. It was much the same with Solyndra, A123 and other now-defunct ventures.

      But in the case of Elon Musk, he does have a record of being able to deliver, albeit with lots of tax breaks and financial help. Space-X is commendable and has proven itself and Tesla cars are very popular with the moneyed niche crowd that can afford such toys. That’s the difference between men and boys — the price of their toys.

      Then again, ANY business or venture could croak at any time, given the perfect storm. Just look at pre-2009 GM and Chrysler. I did not see the implosion coming, but my broker did.

      I’m not an EV fan, but when it comes to EVs I would bet on Toyota and Tesla before I would bet on GM, Nissan or anyone else (at this time). Only the Chinese Fisker with A123 batteries could possibly sell more, faster.

  • avatar

    Anyone who knows if the termination of the battery delivery deal with Toyota will affect the plant’s prospects and perhaps even Tesla itself?

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