Tesla Motors’ electric car battery plant will be worth $100 billion to the state of Nevada, according to the men who crafted the deal.
Nevada Gov. Brian Sandoval and Tesla Chairman and Chief Executive Elon Musk said Thursday that the Palo Alto-based company’s lithium-ion battery plant will prove a boon for both sides, including billions in investment from Tesla and billions in tax breaks from Nevada.
The proposed $5 billion “gigafactory,” where Tesla will produce batteries in partnership with Japanese electronics giant Panasonic, will be built on property called the Tahoe Reno Industrial Center near Sparks, in northern Nevada.
Tesla purchased the land and broke ground there in June, halting construction before actually pouring concrete while negotiations with the state continued, said a source with knowledge of the talks who was not authorized to speak publicly.
Trumpeting the news at a press conference in Carson City, Sandoval said the deal would “change Nevada forever … and stream billions of dollars into our economy.”
Hearkening back to the state’s pioneer beginnings, and calling Tesla’s Musk “a rare visionary who has the courage to reach beyond and to convert the unthinkable into reality,” Sandoval said: “We are determined to be a major part of moving our country and our global economy forward. Ladies and gentlemen, we are ready to lead.”
Under the terms of the proposed deal, according to Nevada documents, Tesla would receive up to a 100 percent tax abatement for the next 20 years for all sales tax, and up to a 100 percent tax abatement for the next 10 years for all real property tax, personal property tax and modified business tax.
Tesla would also receive a transferable tax credit of 5 percent of the first $1 billion it invests in the state, and of 2.8 percent for the next $2.5 billion.
The governor’s office said the deal would include a $5 billion investment over the next three to five years, and a subsequent investment of an additional $5 billion over the following five years.
In addition to 6,500 factory jobs, at $25 an hour for each position, the Tesla deal would create 16,000 other jobs — including 3,000 construction jobs — while increasing state employment by 2 percent and regional employment by 10 percent.
The state said Tesla would also make a direct $37.5-million contribution to Nevada K-12 education, beginning in August 2018, and provide the University of Nevada Las Vegas with $1 million for advanced battery research.
The state concluded that the Tesla deal would have a $1.9 billion “total fiscal impact” over 20 years, including an infusion of $430 million in state revenue, $950 million in local revenue and $500 million in K-12 education revenue.
The deal represents a win for the state, one analyst said, but at a cost.
“This is taxpayer money, and it’s quite a bit of money,” said Thilo Koslowski, automotive practice leader at the technology research company Gartner. “California lost, and Nevada won, but at the point of a huge incentive.”
The first batteries would roll off the line in about three years — when Tesla plans to launch its new Model 3, the “mass market” sedan. The company has said the Model 3 will sell for $40,000, or about half the cost of its current Model S sedan.
