Tesla Gets $39 Million In Sales Tax Credits From California, But Still More Costly To Operate There Despite Tax Break

2 years ago by Mark Kane 25

Tesla Model S

Tesla Model S

Tesla Factory in Fremont, California

Tesla Factory in Fremont, California

Los Angeles Times points out that Tesla Motors this past year received $39 million in California state incentives under the Sales and Use Tax Exclusion (STE) Program.

The program was launched in 2010 to support local manufacturing (exclusions include purchase of equipment).

Tesla has already received $89 million in several previous rounds, so in total the incentives received stand at $128 million. The amount is bit because Tesla is investing a lot in manufacturing capacity and is becoming a large company.

In a somewhat related matter, Elon Musk’s SpaceX got $30.3 million from the same program.

According to the Los Angeles Times “Musk’s companies were the biggest beneficiaries of the program, which awards up to $100 million each year. Tesla applied for the most recent sales tax exclusion based on more than $463 million worth of expected purchases related to the expansion of its Model S and Model X.

About the STE Program

The California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) provides a sales and use tax exclusion for advanced manufacturers and manufacturers of alternative source and advanced transportation products, components or systems. The STE Program is currently authorized through 2020.

The STE Program was originally authorized by Senate Bill 71 (Padilla, 2010), which allowed CAEATFA to provide a sales tax exclusion for manufacturers of alternative source and advanced transportation products. In 2012 the STE Program was expanded by Senate Bill 1128 (Padilla) to include advanced manufacturing projects.”

STE is available for all companies – small ones too – as long as they qualify. There is also chance that in the next rounds, an annual cap of $100 million will be increased or removed (sounds like someone intends to bring back manufacturing jobs to the state).

One of the most interesting parts of the story is Elon Musk’s (Tesla and SpaceX CEO) response. Musk doesn’t seems satisfied that the article presents only side with high taxpayer incentives, while being silent about the fact that even after deducting the incentives, manufacturing in California is still more costly compared to some (most?) other states.

tax teslaSource: Los Angeles Times

Tags: , , , ,

25 responses to "Tesla Gets $39 Million In Sales Tax Credits From California, But Still More Costly To Operate There Despite Tax Break"

  1. Jacked says:

    Silicon Valley is worth the extra cost. Nowhere else is there such a volatile mix of talent and culture. And it’s good to keep the manufacturing plants close to HQ for better oversight.

  2. Skryll says:

    It’s good to keep one manufacturing plant close to HQ, but there is no reason to have them all there.

  3. Robb Stark says:

    Tesla is the largest manufacturing employer in the State of California.

    World wide Tesla has over 14k employees and most of those are in California.

  4. Stimpacker says:

    Los Angeles Times, NYT, WSJ are all very anti-solar and anti-EV.

    They suck.

    1. ffbj says:

      The evidentiary support for this argument is compelling.

      1. stimpacker says:

        You obviously don’t read those publications. No need for me to quote what is openly published.

  5. Brian says:

    Does Tesla really “receive” this money, or do they just not pay it in the first place? Seems like deceptive reporting to me.

    1. Grendal says:

      Generating inflammatory headlines is how they make any money. If they published a headline saying “Tesla is the largest manufacturer in our state and has the highest tax exclusions to keep them here” you won’t generate the needed revenue to stay in business.

      1. scott franco says:

        Government considers themselves to have “given” you money if they don’t take it from you in the first place.

        This may seem to make no sense, but it makes perfect sense if you realize that government considered *ALL* money to be theirs…. they are just letting you use it for a while.

        1. Nick says:

          This is some kind of weird psychology.

          If you owe me money and I forgive your debt, that is precisely the same as me giving you cash.

          “A penny saved is a penny earned.”

  6. EVcarNut says:

    I am Pretty Sure Just like The Mega Battery Plant in Arizona They Get a “TAX” exception. They don’t Receive any Actual Physical Monies…

    1. Pushmi-Pullyu says:

      Must be some alternate world Tesla. In our world, Gigafactory 1 is in Nevada.

      And while it’s true that Tesla received no direct monetary payment from Nevada as an enticement to locate the factory there, Nevada did give Tesla $195 million in transferable tax credits, which they can surely sell for not much discount on the dollar.

      1. evcarnut says:

        I HAD A BRAIN DRAIN…YES IT IS “THE GIGGLES FACTORY”……L M A 0….. U GUYS D0N’T MISS A THING!

  7. ffbj says:

    Elon Musk is an evil genius attack ad:
    http://cleantechnica.com/2016/01/02/elon-musk-attack-ad-is-interesting/

    Right Wing FUD. Expect more.

    1. Get Real says:

      Yep, Musk is building a Giga Factory for batteries while the Koch-heads and friends are funding what is basically a Giga Factory producing rightwing FUD and now social services to poor people to try and buy their votes (This after buying the Republican Party):
      http://www.politico.com/story/2015/12/charles-david-koch-poverty-charity-216631

      1. Those “Koch-heads” as you call them also employ about 60k people in the United States, most of whom are not rich at all but are able to support their families because of Koch Industries.

        Regarding corporate taxes, just do away with them. All taxes are paid (passed on) by individuals anyway, the corporate tax system is just a way for politicians (both D and R) to convince voters that they care about them by taxing the “evil, wealthy corporations.”

      2. AlphaEdge says:

        Basically the article is about appealing to “poor people” to think for themselves, and help themselves instead of looking for gov’t support, and to support conservative causes. Oh my! What evil!

        Only the Democrats can appeal to the poor! Only they can keep them on welfare for life.

  8. Kakkerlak says:

    Tax incentives for manufacturing companies are very common.

    Washington gave Boeing a break of about 8.6 billion dollars over 16 years to build the 777X here.

    Tax credits for the Big Three in Michigan are actually secret, though it’s in the 1.5 to 3 billion dollar range (each) for GM, Ford, and FCA.

    Back in 2009 as the NUMMI plant (now Tesla’s factory) was foundering, California offered large tax credits to Toyota (including $29 million in interest-free loans) to keep it open.

    So yeah, tax breaks are a thing.

    1. AlphaEdge says:

      Yeah, and almost every gov’t on the planet does them! Good for California for attracting, and keeping Tesla.

      1. EVcarNut says:

        Yes All Governments Give Tax Break so That They Can Create Thousands of Jobs & Government Then Collects Taxes From The WORK FORCE & all the other Businesses They Create & From money They Spend…It’s a Snow Ball Effect Everybody Wins!

  9. Craig Capurso says:

    I is just a mater of time that California will chase even Tesla out

    1. Pushmi-Pullyu says:

      I suspect that in the long term, you’re right. California’s taxes are too high, and its pro-union laws and regulations too strong, to provide a good environment for a business employing thousands of blue-collar workers.

      Not that I’m suggesting there is anything wrong with States protecting workers’ collective bargaining rights. I’m entirely in favor of local unions, altho national Big Unions are almost as bad for their workers as Big Business. But from a business standpoint, rather than an ethical/moral one, Tesla would be better off located in a State with union-busting laws.

      It will be quite disruptive for Tesla to move its major auto assembly lines to another State, if and when that happens. But moving the headquarters likely won’t be that big a deal, aside from the inconvenience of their executives having to move.

      1. Nick says:

        I think this is a common fallacy.

        Moving away from great employees can be death for a business which relies on creativity.

        No business likes being in silicon valley for the business environment, it’s all about the people and the network.

      2. Nathanael says:

        In addition to what Nick said, which is all correct….

        Tesla got the NUMMI factory for far, far less than it was worth. Moving would require setting up a new factory for the actual cost of setting up a factory, and they wouldn’t be able to sell the factory to anyone for what it’s worth. There’s huge value to Tesla in that Tesla Factory, but very little value to anyone else in it.