How Tesla got Nevada to give it $1.4B in exchange for a giant battery factory

Above: Tesla's "Gigafactory" will produce an enormous quantity of lithium batteries -- and will be powered by renewable energy, Tesla says.

Above: Tesla’s “Gigafactory” will produce an enormous quantity of lithium batteries — and will be powered by renewable energy, Tesla says.

Elon Musk is riding high. He’s running two acclaimed companies, SpaceX and Tesla. The former recently scored a multi-billion-dollar contract with NASA to shuttle supplies and astronauts to the International Space Station.

The latter is building one of the most highly-acclaimed cars ever, simultaneously legitimating the electric car and proving that radical innovation in auto design is still possible. He’s been compared to Steve Jobs, Henry Ford, and Tony Sark.

And on the strength of his extraordinary reputation, Tesla has been able to win some extraordinary concessions from the state where it will be building its gigantic “Gigafactory” (.pdf) a huge plant that, once it’s at full capacity, will single-handedly double the worldwide production of lithium ion batteries.

A recent Fortune story explains, step by step, what went on behind the scenes as various states jockeyed for Tesla’s favor. Ultimately, Nevada won out, by giving Tesla a generous package of incentives, including:

  • 20 years without paying sales tax on equipment and construction materials (worth $725.8 million),
  • 10 years of zero property taxes ($349 million)
  • 10 years of discounts on payroll taxes ($29.4 million)
  • $195 million in tax credits from a program originally meant to benefit filmmakers and insurance companies
  • $113 million in Nevada state funds committed to building a new, four-lane highway from U.S. Route 50 to the Gigafactory location
  • $8 million in electricity discounts for Tesla
  • 980 acres, paid for by the state, in a desert location east of Reno
  • A bill to legalize direct car sales in Nevada, a serious point of contention between Tesla and most other states.

Author: Daily Tech Whip

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