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Nevada governor enacts Tesla tax break package

$5 billion battery factory to bring more than 20,000 jobs to the state.


CARSON CITY, Nev. — Calling it one of the most important pieces of legislation in Nevada history, Gov. Brian Sandoval signed into law an unprecedented package of incentives to seal a deal to bring Tesla Motors’ $5 billion battery factory to the Silver State.

The “gigafactory” is expected to bring more than 20,000 jobs and $100 billion to Nevada’s economy over the next 20 years. It will be the biggest lithium battery factory in the world and is critical to the electric carmaker’s plans to begin mass marketing a more affordable line of the vehicles within three years.

One lawmaker said it was the most important development in Nevada since the construction of the Hoover Dam southeast of Las Vegas during the Great Depression.

“It doesn’t get any bigger than this,” Sandoval said as he put his signature to four bills after the state Legislature unanimously approved the package Sept. 11 that includes tax credits and other incentives worth up to $1.3 billion.

“This is some of the most important legislation that’s hit this state in perhaps our history,” the Republican governor said. “We have changed the trajectory of this state, perhaps forever.”

Flanked by legislative leaders and dozens of lawmakers, Sandoval presented a Nevada license plate with “TESLA” to Diarmuid O’Connell, Tesla’s vice-president for business development who helped pick the site at an industrial park along Interstate 80 about 15 miles east of Sparks.

“We are really excited to get going on this project,” O’Connell said, which will bring prices down for batteries to power its upcoming line of cars with a price tag less than $40,000. “It means so much for our mission, which is to catalyze sustainable transportation by creating a mass market for electric vehicles.”

Under the biggest piece of the package providing up to $1.1 billion in tax abatements, California-based Tesla would pay no property taxes or payroll taxes for up to 10 years and no local sales or use taxes for up to 20 years. Another $195 million in tax credits were also approved.

Tesla will have to give some or all of the money back if it fails to spend $3.5 billion in the state within 10 years. The agreement also mandates half the jobs go to Nevada residents, at both the factory expected to employ 6,000-plus and among the 3,000 projected construction jobs.

“This really is the definition of the rising tide lifting all boats,” said Steve Hill, director of the Governor’s Office of Economic Development. “It wasn’t that long ago we were suffering through one of the worst recessions in Nevada history with 14.5% unemployment.”

Sandoval also signed three other bills that made up the package, one discounting electricity for Tesla and another ending a $25 million annual subsidy – $125 million over five years – for insurance companies to help pay for Tesla’s tax credits.

The final one makes it clear it is legal for Tesla to sell the cars it manufactures at dealerships it owns in Nevada. That had been a sticking point in Texas, which along with California, Arizona and New Mexico had competed with Nevada for the plant.

All four bills passed on votes of 21-0 in the Senate and 39-0 in the Assembly.

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