Nevada Incentivizes Tesla To The Tune Of $1.3 Billion For Gigafactory

We bought you the story previously about the Tesla Motors Gigafactory. It’s now slated to be built near Reno, Nevada. Construction for that project is already underway. In our report we had some figures about what lawmakers have done in the past to incentivize an auto manufacturer to build a factory in their state. The oft-used estimate for Tesla Motors in Nevada was around $500 million, including tax breaks. That figure could prove to be off by more than 50%.

Nevada Governor Brian Sandoval signed a package of bills on September 11, that add up to $1.3 billion in tax breaks and other incentives for Tesla Motors. During his photo-op and signing, the Governor said, “Nevada has announced to the world–not to the country, but to the world–that we are ready to lead.“

Specifically, Tesla will receive $725 million in sales tax exemptions and $300 million in payroll and other tax exemptions during the next 20 years. Tesla is also not expected to pay any property tax till around 2024. Nevada is willing to incentivize Tesla since their Gigafactory is expected to bring 20,000 jobs and $100 million dollars to the state during the same two-decade span. One Nevada politician said that he has to think back over 80 years to the last time something this big happened in the Silver State. Ira Hansen, an Assemblyman from Parks said that, referring to the Gigafactory, “This is arguably the biggest thing that has happened in Nevada since at least the Hoover Dam.

Beneath the smiling press conference is the reality that this move is a gamble for both parties. Tesla must spend at least $3.5 billion in Nevada during the next 10 years or be forced to repay all or part of the large incentives that have been promised to them. Part of the agreement also requires Nevada residents make up at least 50% of the workforce in the Gigafactory. An estimated 6,000 to 6,500 workers are needed to staff the construction of and operation at the Gigafactory. Tesla is being viewed as a savior in a state in desperate need of jobs. As Steven Hill with the Nevada Governor’s Office of Economic Development explained, “This really is the definition of the rising tide lifting all boats. It wasn’t that long ago we were suffering through one of the worst recessions in Nevada history with 14.5 percent unemployment.”

This Gigafactory project could change the electric car landscape in the United States. Elon Musk envisions a Tesla Model III sedan that cost around $35,000 with a range of 200 miles. In order to get there the Gigafactory must be successful. The Gigafactory will be the largest Lithium-ion battery factory in the world. It will cost a large fortune. Tesla is leveraging their immense momentum on this build. Tesla is being tested. The rubber is hitting the road for the California-based company. Amidst an endless slew of positive articles and fuzzy news stories, Tesla now has to deliver on the hype that has made them media darlings. The question is whether or not it’s going to work. Nevada is certainly banking on it. However, what would happen to the electric car movement if Tesla’s Gigafactory goals weren’t achieved? Would it be the end of them? Would it take wind out of the sails of the sweeping electric car movement? What do you think? Will the Gigafactory be successful or eventually fail?