09/16/2021

How Tesla’s hunger for tax breaks continues in California

Tesla Motors Inc., as part of its bid to expand electric vehicle manufacturing facilities in California, on Tuesday is up for another sales-and-use tax exemption on nearly $1.2 billion of equipment and machinery.

The California Alternative Energy and Advanced Transportation Financing Authority, a little-known arm of the state Treasurer’s Office, is scheduled to consider expanding a tax break Tesla already receives at its meeting in Sacramento. Agency officials put the value of financial assistance Tesla is requesting at $98.5 million for the total Model 3 project. Tesla used $14.8 million in state tax credits for the Model 3 through June 30.

California officials estimate a net of $1.67 million in fiscal and environmental benefits to the state.

Tesla, which famously spurned California for Nevada’s $1.2 billion incentive package when it decided to locate its massive battery factory in Sparks, was granted six previous sales and use tax exemptions from the Golden State, the first of which came in 2009. The awards were for $26.6 million, $23.6 million, $34.7 million, $39 million, $47 million and $20 million, though it wasn’t all used for the Model 3.

Tesla is spending the nearly $1.2 billion to support the design, development and prototype the Model 3, expanding its factory in Fremont, corporate headquarters in Palo Alto and design studio in Hawthorne (Los Angeles County). The company in its application states that it’s expanding its body shop, stamping line, vehicle assembly, plastics shop, production control, tooling and prototyping to design and build the Model 3, the latest in its line of electric cars priced at $43,000 each on average.

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