Official: $1.3 Billion In Incentives Brings Tesla Gigafactory To Nevada – Videos

3 years ago by Jay Cole 44

"Nevada Is It"

“Nevada Is It”

Nevada Gov. Brian Sandoval and Tesla CEO Elon Musk announced Thursday that Tesla will indeed build their Gigafactory in the state of Nevada.

All it took was up to $1.3 billion worth of incentives over 20 years.

The Governor called the todays event a “monumental announcement that will change Nevada forever,” while adding that he expected every dollar the state spends in aided Tesla to comeback 80 fold.  “Even the most skeptical economist would conclude that this is a strong return for us.”

Here Is The Site Of Tesla's Gigafactory - Currently At The 'Pad' Stage (Image via KTNV Channel 13)

Here Is The Site Of Tesla’s Gigafactory – Currently At The ‘Pad’ Stage (Image via KTNV Channel 13)

At full capacity the plant is expected to employ up to 6,500 persons.

If the Tesla CEO is to be believed, his company walked away from even more money offered by other states in lieu of a higher confidence that facility will indeed be ready by 2017.

Translation: that basically that Nevada had the least amount of red-tape to deal with.  Mr. Musk did not get into any details of offers from the losing states – California, Texas, Arizona or New Mexico.

Musk did note that the plant could actually be operation by late 2016 thanks to the speed at which the process has been moving of late.

“I would like to recognize the leadership of Governor Sandoval and the Nevada Legislature for partnering with Tesla to bring the Gigafactory to the state. 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. Together with Panasonic and other partners, we look forward to realizing the full potential of this project.” –  Elon Musk

Later in the press conference, Elon Musk was asked if the hunt was still on for a second battery location, to which the CEO said,

“Nevada is it.”

The specific details and approvals will be hashed out in a special legislative session early next week, and while the exact amount of the incentives is not know (as the utilization of the factory puts money on a sliding scale), it starts at around $865 million according to the executive director of Sandoval’s Office of Economic Development, Steve Hill.

The Governor’s office figures that the factory will ultimately generate $100 billion for the state economy and  create 22,000 new jobs over the next 20 years.

The Reno Gazette Journal (via AutoBlogGreen) breaks down incentives as follows:

  • $725 million for a 20-year 100 percent sales tax abatement
  • $332 million for a 10-year 100 percent property tax abatement
  • $120 million in transferable tax credits
  • $75 million in transferable tax credits worth $12,500 per job times 6,000 jobs).
  • $27 million for a 10-year, 100 percent modified business tax abatement
  • $8 million in discounted electricity rates for eight years

Also part of the deal – the Governor said that Nevada would adjust its laws so that Tesla can sell cars at its company stores.

Governor’s statement:

Elon Musk’s turn at the podium:

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44 responses to "Official: $1.3 Billion In Incentives Brings Tesla Gigafactory To Nevada – Videos"

  1. > Also part of the deal – the Governor said that Nevada would adjust its laws so that Tesla can sell cars at its company stores.

    In a state where just about everything is legal, it seems a mind bending contortion that selling a car direct from the manufacturer is not.

  2. GeorgeS says:

    “No hunt for another one (state).”

    Good.
    Get on with it!!

  3. Johnny GT says:

    To the naysayers.

    Eat it.

  4. GeorgeS says:

    I have to say I like that new rendering in the title photo.

    Could it be that the capacity factor for wind and Solar had an influence on the site selection?

    1. Anon says:

      It looks kinda like the outline of a 18650 cell covered in solar panels.

      I like it.

      A factory that looks like a giant battery. 🙂

      1. ClarksonCote says:

        Ha, nice. With an entranceway on one side of the building, the battery shape would be complete.

        1. Foo says:

          They should put a giant + and – at each end of the building.

          1. kalle says:

            in different shades of PV panels perhaps 😉

  5. Ocean Railroader says:

    I think 6500 people with good playing jobs will off set this money the state has to spend. Not to mention if you have 300,000 Teslas on the road in Navada it would most likely save ten times that in oil over that times that money during those 20 years.

    1. Jouni Valkonen says:

      There are also economic multipliers. Those 6500 workers will buy lots of local services and therefore are providing jobs for many other people in Nevada.

      People often does not understand that in economics, money does not disappear from the economy, but it is just transferred from pocket to pocket.

      1. Stimpacker says:

        Yup, economic multipliers have a huge effect that are largely ignored or downplayed by jealous critics in other media.

        The workers will buy houses, cars, shop, wine and dine in the local area, creating an economic boom.

        This is already proven. Tech companies like Intel and HP like to build large campuses in small towns (e.g. Dupont, WA, Roseville, CA). After a while, these towns become large, vibrant, growing cities and attract non-tech jobs due to the quality of life and proximity to major cities.

        Take the $12,000 tax credit per Tesla job. It’s peanuts. Foreign countries like Singapore lure tech jobs by paying 100% OF THE FIRST YEAR SALARY (on top of other incentives). Like Nevada, by investing in skilled manufacturing jobs, it will create a skilled worker base that will in turn, lure more jobs to the state.

        California is sadly filled with leechers mooching off Silicon Valley and Hollywood. They are anti-business and even anti-farming. My company, like Toyota, is making many of us move to Texas (on our own dime coz they know how bad things here are).

  6. MDEV says:

    Why incentives with discount electricity, I thought that with all the solar panels and wind turbines the gigafactory will be self sustainable.
    Anyway the electric revolution has take off……

    1. Rob Stark says:

      Between the start of construction to the time the solar panels are operational will use A LOT of electricity.

      Plus Tesla will buy electricity when the sun is not shinning and/or the wind is not blowing. And selling some back during peak hours. The local utility charges for that.

      1. Alaa says:

        Why would they buy electricity from any one? They are the best in the world in making batteries and can store as much as they need in batteries during the day and use it at night.

      2. timF says:

        Tesla wont have battery storage on their factory, to storage the excess on solar and wind?

        1. Jouni Valkonen says:

          Of course Tesla will have huge electricity storage, because such factory produces lots of test runs and other flawed cells that are no good for selling to customers, but they can be of course stacked into local energy storage system.

          Therefore Gigafactory will have practically free energy storage system. And in Nevada in particular it is more or less trivial to go 100 % renewables.

          Actually it is likely that the cost of solar panels will go down that much that even wind power or grid connection is not required. That electricity production is sufficient even on the cloudiest winter days.

  7. Ellison says:

    Does anyone know if this is at the Tahoe Reno Industrial park with combined data center and renewable energy areas? It seems to be.

    1. Anthony says:

      Apple is building a data center in the same industrial park, and they are big on green energy so while it might not be right next door, it is available and in the area.

      Nevada has a lot of geothermal resources which help too since its reliable baseload energy.

  8. ffbj says:

    Wow, for that I would build a giga-factory in NV. A precedent for the giga-bucks, and direct sales capability, his Muskness and court will require and expect for future projects.Truly it is the Wild Wild West:

  9. sven says:

    I’m assuming the the bulk of the 20-year 100% sales tax abatement will go towards buying lithium from Nevada mines and buying other raw materials needed to make the battery packs. The sales tax rate in Reno is currently 7.725%. That’s certainly one way to lower the price of lithium-ion batteries!

    I wonder how much of the expected reduction in lithium-ion battery cost that the Gigafactory will bring is attributable to the these tax abatements and other incentives, as opposed to efficiencies of scale? Hmmm. . .

    1. Ocean Railroader says:

      This could explain why Tesla didn’t build this factory in China. In that China is ten times worse at writing their own game rules and poring money into their own industries to make sure they are a head price wise over everyone else in the world.

      1. MDEV says:

        And because Elon is all about America

      2. Phr3d says:

        Of course, there is the Real possibility that China could dump batteries with their endless resources (see also memory manufacturing in U.S.)

        1. Stimpacker says:

          Haha, that’s a joke, right? Go buy a bunch of Chinese-made 18650 batteries (the type that is in a Tesla Model S). Chances are more than half are fakes (with less than rated capacity).

          Remember the computer motherboard manufacturers who got stung by fake capacitors?

    2. Mike I says:

      Companies normally don’t pay sales tax on materials that go into its products. They pay sales tax on equipment installed in the factory and supplies used that are not included in the product. Those are the things that Nevada is forgoing revenue on. Perfectly reasonable. Tesla already has similar Use Tax and Business Property tax exemptions for certain items in the Fremont factory. They also got incentives for energy efficiency improvements in the Fremont factory.

      1. Mint says:

        I thought virtually all B2B purchases get sales taxes refunded, and it’s only charged on final retail sales. Equipment gets taxed?

        Anyway, the sales tax exemption implies ~$10B of products. I don’t think the Gigafactory is going to buy that much stuff from NV. I really think it implies Tesla is going to sell retail products originating there, like home battery storage units.

  10. ffbj says:

    Teslos the Titan:

  11. Fabian says:

    GO TESLA GO!!!!!

  12. Surya says:

    Funny, you can already find it in Google Maps 🙂

    1. Leptoquark says:

      Funny, when I put “tesla gigafactory” into Google maps, it points me to the White House in Washington DC.

  13. Priusmaniac says:

    One thing that attracted my attention is the numbers given for the production:
    50 GWh for 500000 vehicles.

    That would mean 100 KWh per vehicle which is more than the present 85 KWh in the Model S.

    In other articles it is stranger still because they indicate 35 GWh cell output and 50 KWh pack output, while one would rather expect a high cell output number than a pack output number since these are made with the cells and those would likely also be used for other smaller applications. Or is it the other way around in which case the packs would be made with 35 GWh of cells from in house and an extra 15 GWh of cells would come from outside to bring the complement needed to obtain what it takes to have 50 GWh of pack output.

    1. kalle says:

      maybe the missing 15 GWh is recycled packs?

    2. Mike I says:

      The extra 15 GWh is coming from Panasonic’s existing factories in Japan. Those cells will be built into packs in the Gigafactory.

    3. Mikael says:

      Not all packs will be used for cars. It’s pretty safe to assume that the average for the cars will be somewhere around 60-70 kWh since most packs will be used for the Model 3 (which will probably get around 50-60 kWh per car).

      That leaves 20-40% of the capacity to energy storage (Solarcity) and to sell to other companies or car manufacturers.

  14. abc123 says:

    Elon Musk… this guy will be remembered in the history books.

  15. Tess1988 says:

    Could someone please explain to me what 20-year 100 percent sales tax abatement and all the other tax breaks mean in real English as I live in Australia, does that mean that every time someone buys a car they pay the sales tax but tesla also gets that same amount to buy/reinvest in stuff for Tesla cars?

    1. Mike I says:

      In the United States, companies have to pay sales tax on all the equipment that they purchase and install in the facility and all the supplies that they use. This is not just industrial machinery, but also all the office furniture, computers, etc. This sales tax is administered at the State level, so it is within the authority of the state legislature to give exemptions to special economic development zones, which will almost certainly be set up for the Gigafactory. Another significant tax, at least in California, is the Business Property Tax. All of the assets that I previously mentioned that companies have to pay sales tax on, they also have to pay Property Tax on every year, as a percentage of their slowly depreciating value. Real Property (buildings and land) are also subject to Property Tax, but it is handled under different rules. Tesla will almost certainly have a long term land lease from the property owner (Tahoe-Reno Industrial Center) but they will likely own the structures that they build there. The value of those would be subject to Property Tax, which appears to be abated (made exempt) by the proposed deal.

      1. Mike I says:

        Sales tax in Nevada varies between 6.85% (state portion) to 8.1% depending on location and the applicable local components (City & County Sales Taxes).

  16. Kevin says:

    This is another fine example of the government robbing the middle class in order to cater to the 1% and to companies that operate on unsustainable business models. You speak of revenues over the next 20 years as if they are guaranteed or even slightly better than a complete gamble. Shame on Nevada. I wish them all the best with their endeavor, after all I am still a fellow American, but citizens of this state should be outraged by the fiscal irresponsibility demonstrated by their leadership.