The Nevada Economic Development board on Thursday gave final approval to the tax breaks and incentives that convinced Tesla Motors to build its gigafactory in Storey County.
The vote was unanimous to approve the estimated $1.1 billion worth of incentives, the biggest portion of which is eliminating the sales and use tax on the machine tools and other equipment that will be installed in the mile-long battery factory at the Tahoe-Reno Industrial Center, 15 miles east of Reno-Sparks.
The deal was approved by a special session of the Nevada Legislature in September.
Gov. Brian Sandoval and Steve Hill, head of the governor’s Office of Economic Development, said studies estimate the overall economic impact of that plant in Northern Nevada will be nearly 100 times the cost of those tax breaks with some $40 billion coming in direct impacts from the more than 6,000 who will eventually be employed at the plant, the 3,000 workers needed to build it and install the equipment through their spending in the community.
Another estimated $60 billion in long term impact is projected from the “ripple effect” the battery factory will have by bringing other supply and support businesses to Western Nevada.
Hill emphasized there are “clawbacks” for all the different incentives including Tesla and its partner companies including Panasonic must invest at least $3.5 billion in the plant in order to qualify for rebates. If Tesla doesn’t meet the requirements, the state will get back any tax incentives given to the companies.
“In order to receive these benefits, Tesla has to earn it,” said Sandoval.
Tesla’s Daniel Witt said there are already 400 plus workers on the site and 80 percent of them are Nevadans.
Asked about the potential market for the vehicles powered by the batteries, Witt said, ‘we are not demand restricted; we are production restricted.” He said the company is planning to introduce its second model, an SUV, next year and believes there’s going to be “a tremendous market for it.” That will be followed by a median priced model designed to appeal to a mass market.
In return for moving to Nevada instead of Texas or Arizona, the other two major competitors, Tesla and its partners will get a 100 percent abatement of both real and personal property taxes as well ad the Modified Business Tax for 10 years, an abatement of all but 2.75 percent of the sales and use tax for up to 20 years, and transferable tax credits totaling up to $190 million over the next decade.
Hill said despite that, the plant, “guarantees thousands of Nevadans will be employed.” Tesla has agreed to hire fully half its employees from Nevada.
After the vote, Hill said he and his staff will put the entire agreement into a contract for Tesla officials to sign.