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.

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Source: Los Angeles Times