Elon Musk, always quick to respond to any perceived slight against Tesla, has posted a detailed rejoinder to a recent Fortune article that told the story of how the company selected a Nevada site for its Gigafactory.
The article didn’t accuse Tesla of doing anything wrong, much less illegal. On the contrary, as befits a business magazine, the tone was almost admiring as Fortune described the Machiavellian machinations by which the Silicon Valley trendsetter played one state off against another to secure a generous package of incentives.
However, the practice of states awarding tax incentives to private companies is a controversial one, so Musk explained why the Gigafactory deal is “a no-lose proposition” for the state of Nevada.
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He points out that the incentive proposal received approval from every member of the Nevada Senate and House, with no dissenting votes, and that the debt ratings agency Moody’s assessed the deal as a credit positive for both the Reno area and Nevada as a whole.
The state will not be writing Tesla a check for $1.3 billion. In fact, Tesla has received no cash in the deal. “We did receive land through a swap the state did with our developer, but, if you have been to Nevada, you will notice that there is quite a lot of extra land with nobody on it. This is not in short supply,” wrote Musk.
“Of the $5 billion investment needed to bring the Gigafactory to full production in five years, state incentives will cover about 5%. Compared to the operational and upgrade costs over a 20-year period, expected to be approximately $100 billion, state incentives will constitute just over 1%. However, the 20-year mark is simply when the last of the incentives expires. The Gigafactory itself will continue contributing economically to Nevada for much longer.”
An article from Reno TV station KRNV offers some perspective on how the Gigafactory might impact the area, by looking at Fremont, California, where Tesla currently builds its Model S sedans. Political leaders and educators sing the company’s praises.
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“We have over 4,000 people who are working, assembling state-of-the-art vehicles now really helping Fremont solidify its presence in the Silicon Valley,” said Fremont Mayor Bill Harrison. “There’s something about Tesla that people want to locate around. We’ve seen a bump and other companies that want to locate around there because they want to be around Tesla. They want to be around that area as it is starting to boom.”
“Tesla’s been a great partner serving on the advisory board for our technical education program and also hiring students from the school district,” said Fremont School Superintendent Jim Morris, adding that the company has hired some 30 students who have gone through the district’s Engineering and Automotive Technology programs. “Proximity helps young people to have dreams to say, ‘Hey, maybe I could go be an engineer. Maybe I could design this car of the future and we’re down the street.’ We’ve seen an explosion of interest in our architecture and engineering pathways for kids.”
Source: Tesla Motors