Nevada Gov. Brian Sandoval signed off on bills seeking to provide a $1.3 billion incentives package, including tax breaks, for electric carmaker Tesla Motors’ planned “Gigafactory” near Reno, according to media reports.
“It doesn’t get any bigger than this,” Sandoval reportedly said, before putting his signature on four bills that had earlier been unanimously approved by the state legislature. “This is some of the most important legislation that's hit this state in perhaps our history…We have changed the trajectory of this state, perhaps forever.”
Under the approved incentives plan, Tesla Motors Inc. (NASDAQ:TSLA) will be exempt from property taxes for up to 10 years and from local sales taxes for up to 20 years, saving the company nearly $1 billion. Another $195 million in tax credits were also approved. One of the bills also allows electric car manufacturers, including Tesla, to sell directly to consumers, bypassing the need for a dealership.
However, the tax incentives would hinge on Tesla investing $3.5 billion in the state in the next 10 years, failing which it will have to repay some or all of the money.
“We are really excited to get going on this project,” Diarmuid O'Connell, Tesla's vice president for business development, reportedly said. “It means so much for our mission, which is to catalyze sustainable transportation by creating a mass market for electric vehicles.”
The agreement also mandates that half the jobs in the factory should go to Nevada residents. The Gigafactory, which will be the world’s largest lithium battery manufacturer, is expected to bring nearly 20,000 jobs and add $100 billion to Nevada’s economy over the next 20 years, and will supply Tesla Motors with enough battery cells to produce 500,000 electric cars a year by 2020.
However, credit rating agency Moody’s had earlier said that there was a risk of the economic benefits being offset by the unprecedented tax rebates and incentives being offered. “As a result, local governments are unlikely to see any direct fiscal benefits from the factory for at least the next decade.”