Outsiders to the auto industry they may be, but Elon Musk and his merry band of Teslanauts are masters at working the system to get what they want. A recent article in Fortune tells the tale of how Tesla skillfully played the state tax-incentive game, and scored a sweet deal on its Gigafactory site in Nevada.
The state of Nevada won the prestigious project by offering a package of tax breaks, free land, and other goodies worth approximately $1.4 billion. It’s not the biggest corporate gift basket in history – that honor belongs to Boeing, which has received some $11.9 billion from the state of Washington – but it may be the largest in the automotive industry, edging out Chrysler’s $1.3 billion from Michigan and Nissan’s $1.25 billion from Mississippi.
The story of the competition to land the Gigafactory and its estimated 6,500 jobs makes a thrilling tale, complete with colorful characters such as Lance Gilman, a cowboy-hat-wearing tycoon and “Reno-style philosopher” who owns the fabled Mustang Ranch as well as the Tahoe-Reno Industrial Center where the Gigafactory is now taking shape.
According to Fortune, “Musk showed himself to have nearly as much genius for [political] maneuvering as he does for innovation. Musk played an Oz-like role as master orchestrator, sending signals through earnings calls and blog postings, while keeping the states in the dark and playing on their fears of losing out.”
The game began in October 2013, when representatives from seven Western states met at Tesla’s Fremont factory, to be treated to a presentation on the Gigafactory and a drive in a Model S. Each state delegation was given a spreadsheet with more than 90 questions about each proposed location – and three weeks to submit proposals.
Ironically, California probably lost out on the deal because of its strict environmental laws, which could have led to construction delays. Texas made a valiant effort, tapping a massive “enterprise fund” and even offering to reroute a major highway.
In the end, it was probably not just Nevada’s generous handshake, but the local partners’ go-go attitude, that sealed the deal. Timing is critical for Tesla – the Gigafactory must be up and running when the Model 3 is ready for launch. “We can put up a building as fast or faster than anyplace in the US,” said Gilman, promising that building permits would be issued in fewer than 30 days (he’s also a county commissioner), and that officials will be available to inspect concrete pours at 2 am if necessary.