by Sean Golonka, The Nevada Independent, February 27, 2023
Tesla’s planned multi-billion dollar expansion of its Nevada Gigafactory could see the electric car manufacturer receive more than $300 million in state tax abatements over the next 20 years, according to the company’s abatement application released Monday.
If approved, the abatement application would mean $330 million in new tax breaks for the company — on top of the more than $1 billion in abatements Nevada officials approved for the company in 2014 as it planned its first multibillion-dollar capital investment at the Tahoe-Reno Industrial Center in Storey County, east of Reno.
The expansion would push Tesla’s total capital investment in the region to nearly $10 billion from 2014 to 2028 and create thousands of new jobs, according to the company’s application. Tesla officials added that it could also create more than $766 million in new tax revenue for the state and local governments over the next 20 years.
Those details emerged Monday, just three days ahead of a meeting of the Governor’s Office of Economic Development (GOED) board, where Gov. Joe Lombardo and eight other board members will vote to approve the new abatement deal for Tesla. Their plans to proceed come despite calls frome some Democratic lawmakers to delay approval of the deal by one month to allow more time for public consideration.
Though Lombardo touted Tesla’s expansion during his State of the State address in January, details of the abatement deal were not released until Monday as part of a nondisclosure agreement allowed under state law.
Unlike the 2014 deal, the pending abatement application would not involve transferable tax credits, which are credits that can be transferred or sold to other taxpayers. Tesla was granted $195 million in transferable tax credits in the 2014 deal, which depleted all transferable tax credits allowed to be issued under the 2014 law.
But the other abatements — including 100 percent reductions in the Modified Business Tax (which employers pay on the wages they pay employees) and property taxes over the next decade, plus a reduction in the sales and use tax from 7.6 percent to 5.35 percent over the next 20 years — would be applied to the company’s expansion, under provisions adopted for the company through the same 2014 law.
On top of $330 million in abated taxes, the company projects it could also be reimbursed for more than $81 million in sales and use taxes over the course of 20 years through its status as an “economic diversification district” — a legal term created as part of the 2014 deal with Tesla.
Tesla says it plans to employ at least 3,000 new employees with an average wage of $33.49 per hour, and plans to cover 91 percent of health insurance costs for its employees.
If the deal is approved, the company expects to break ground in May and complete its expansion in May 2026, with new facilities that could “produce batteries for an estimated 1.5 million vehicles per year and … up to 50,000 trucks per year” at “the first high-volume electric semi truck manufacturing facility in the country.”
With the company set to reach 10,000 Nevada Gigafactory employees following the expansion, Tesla’s abatement application also references the company’s intention to invest in the Northern Nevada economy, including plans to help open the first child care facility at the Tahoe-Reno Industrial Center and also work “with leading local developers on agreements to accelerate hundreds of incremental workforce housing units across the northern Nevada region.”
The proposal also notes that the company is not requesting “any modifications” to the 2014 deal, and when abatements from that deal expire next year, the company “will be paying in excess of $50 million per year in annual taxes toward state and local governments going [f]orward.”
Tesla chose to expand in Northern Nevada over Austin, Texas and multiple locations in California, according to its application.