Nevada offers Tesla up to $1.3B for battery plant

[Omaha Steve]

Source: AP-Excite

By SCOTT SONNER and JUSTIN PRITCHARD

CARSON CITY, Nev. (AP) — Gov. Brian Sandoval announced Thursday that Nevada won a high-stakes battle with four other states for Tesla Motors' coveted battery factory, but the win comes with a hefty price tag — up to $1.3 billion in tax breaks and other incentives over 20 years that state lawmakers still must approve.

Sandoval revealed terms of the deal he negotiated with the electric car maker at a ceremony on the Capitol steps attended by Elon Musk, CEO of California-based Tesla. Musk confirmed the search was over for a home for his $5 billion lithium battery "gigafatory," which the company hopes will bring it closer to mass production of a more affordable electric car.

The Republican governor called it a "monumental announcement that will change Nevada forever," creating more than 22,000 jobs and pumping $100 billion into the state's economy over the next 20 years. He didn't mention the total value of the incentive package in his remarks but emphasized that every $1 Nevada invests in the effort will bring $80 back to the economy.

"Even the most skeptical economist would conclude that this is a strong return (on investment) for us," he said about the deal that already has drawn outside criticism from both the left and the right that the tax breaks are too generous. So far, it has not encountered significant opposition from state lawmakers who must approve the incentives.

FULL story at link.



FILE - This Aug. 1, 2014 file photo shows security guards at the gate to the site Tahoe Reno Industrial Center about 15 miles east of Reno, Nevada. Tesla Motors has selected the site in Nevada for a massive, $5 billion factory that it will build to pump out batteries for a new generation of electric cars, a person familiar with the company's plans said Wednesday, Sept. 3, 2014. (AP Photo/Scott Sonner, File)


Read more: http://apnews.excite.com/article/20140905/us--tesla-battery_factory-e46d5ef0e1.html

[SoapBox]

1. And then tonight in the USA Today...

Was an article saying how the guy that owns the industrial park, was so influential in bringing them to NV.

He also owns the Mustang Ranch...ya know...a "brothel".

p.s...I just looked over the article again...$1.3 BILLION tax break? Holy crap!

[hughee99]

2. The 1.3 billion is over 20 years, and IF the projects brings in $100 billion over the same period

it's a good deal. I'm skeptical of the $100 billion claim, though.

[joshcryer]

4. I am skeptical of the $100 billion claim, as well.

It is likely far higher than that. Could be a half trillion dollar industry in the end. The megafactory will be built to scale. Scale big. Tesla gave away all charging patents. It's going to be the replacement for gasoline.

[hughee99]

8. It could be a half-trillion dollar industry

but if Tesla's continue to sell at 70-100k, you're going to have to sell more than a million of them over the next 20 years just to generate $100 billion it gross sales, and will all that money really make it's way back into the Nevada economy, especially given that the factory is making only the battery packs, not the entire car.

I wouldn't be surprised to see the industry that big, but I'm skeptical how much of it makes it's way back into Nevada's coffers.

[FarrenH]

9. Tesla isn't just betting on its own car sales

they want other companies to build cars that use their batteries. It's the only way Musk could have justified to shareholders making their IP available to everyone.

[Major Hogwash]

3. This is great news for Nevada.

But, I wonder if they aren't slightly underestimating the amount of money that could be pumped into the state's economy over the next 20 years.
$100 billion dollars sounds like a lowball estimate to me.

[joshcryer]

5. I think they made a super conservative estimate.

One that was lowballed on purpose. If they said "hey, we'll bring $500 billion to the economy here" then they would not have even got a tax break. The state would've said "hey, you look like you're going to completely and utterly dominate the electric car battery industry if not the entire US battery industry, why should we give you a tax break?"

I'd wager $100 billion was the low ball estimate.

[LeftyMom]

6. If they wind up employing that many people that's definitely low.

22,000 people is 1/10 of the total population of Reno. A hell of a lot of people would have to move up that direction.

[Taitertots]

10. They are claiming 80 to 1 returns, it is almost certainly too high

[rollin74]

7. a few details on the incentives offered to Tesla

http://www.mynews4.com/news/local/story/Details-on-Nevadas-incentive-package-for-Tesla/7AWXLYajaUiTDPwKzj7c_Q.cspx

WHAT TESLA RECEIVES:

— 100 percent abatement of sales and use taxes for 20 years, worth up to $700 million.

— 100 percent abatement of real property tax, personal property tax and payroll taxes for 10 years. Together the abatements are valued at $675 million to $1.1 billion over 20 years, depending on the size of Tesla's investment.

— Tax credits worth about $195 million over 20 years, including a jobs transferable tax credit of $12,500 per permanent employee, worth $70 million, and an investment tax credit of $125 million.

— The tax credits (about $195 million) are separate from abatements ($675 million to $1.1 billion) for a total package worth about $865 million to $1.3 billion.

— Nevada will purchase the right of way to USA Parkway to connect Interstate 80 south to U.S. Highway 50 east of Carson City and improve access to the site.

— Minor revisions in state law to ensure Tesla can sell its cars through company-owned dealerships.

WHAT NEVADA RECEIVES:

— An estimated economic impact of roughly $5 billion a year for the next 20 years for a total of $100 billion. That's equal to a bit more than 3 percent of the state's gross product.

— Some 6,500 permanent jobs averaging $25 per hour at the Tesla factory and a peak of 3,000 construction jobs leading to the plant's scheduled 2017 opening. About 22,000 projected new jobs resulting directly and indirectly from the plant over two decades.

— Tesla will make it a priority to hire Nevada residents, especially veterans.

— An estimated $1.9 billion in tax revenue for all levels of government, state, local and school districts over 20 years.

—Tesla will make a $37 million contribution to K-12 education — approximately $7.5 million a year for five years.

— Tesla will contribute $1 million to battery research at UNLV.

WHAT NEVADA CUTS:

— The state's existing film tax credit would be cut from $80 million to $10 million.

— A home office credit used by insurance companies would end Jan. 1, 2016, to save $125 million.

— The cuts totaling $195 million offset the tax credits Tesla is to receive.