Tesla Gets $34 Million Tax Break, Adds Capacity For 35,000 More Cars

cartechboy writes "The state of California will give Tesla Motors a $34.7 million tax break to expand the company's production capacity for electric cars, state officials announced yesterday. Basically, Tesla won't have to pay sales taxes on new manufacturing equipment worth up to $415 million. The added equipment will help Tesla more than double the number of Model S sedans it builds, as well as assemble more electric powertrains for other car makers. In addition to continued Model S production, Tesla plans to introduce the Model X electric crossover in late 2014, as well as a sub-$40,000 car — tentatively called Model E — that could debut as soon as the 2015 Detroit Auto Show. It turns out California is one of the few states to tax the purchase of manufacturing equipment — but the state grants exemptions for 'clean-tech' companies."

Why shouldn't it?

[fisf]

Unless you value your environment nothing, why shouldn't there be a financial reward for companies that reduce the harm on it, either directly or indirectly?

Re:Thanks, California taxpayers!

[grogdamighty]

Meanwhile, if Tesla revolutionizes the modern car and creates a mini-Detroit (Golden Age, not now), I'm pretty sure California's taxpayers will be happy with the investment.

Horrah!!

[Capt James McCarthy]

Another business that can't survive without tax payer money to help keep the costs down on a vehicle that only wealthy folks can afford. Brilliant.

Re:Thanks, California taxpayers!

[AK Marc]

Presuming some sarcasm in there, does this mean you refuse to fly? After all, Boeing and Airbus both get direct subsidies greater than Tesla. Or is it OK when a standard tax break is given to Boeing, but not for Tesla? $9 billion is greater than $34 million. By more than $10!

Re:Horrah!!

[magarity]

RTFA - The state the company is located in is one of the few with the madness to tax manufacturing equipment. There's a policy guaranteed to help lower unemployment! /sarcasm. In this particular case they're not surviving on taxpayer money - they're getting a sensible exemption from an absurd policy.

Re:Thanks, California taxpayers!

[Anonymous Coward]

Only if Tesla stays in CA after the free money handouts stop and the "pay back to the people who made you rich and successful" part starts. If they up and move their primary manufacturing centers to the next sucker --- oops, I mean, "forward-looking business friendly state" --- to offer them free money/power/impunity once CA's generosity runs out, that mini-Detroit could end up wherever the leader in the national race to the bottom happens to be.

Re:Horrah!!

[Bacon Bits]

The last step in making technology cheap enough for everyone is not something fresh out of R&D. It's something established that isn't cheap enough for everyone being refined and perfected and improved upon to suddenly be cheap enough for everyone. IBM and DEC didn't start out with commodity hardware. They made mainframes, then they made minicomputers, and then they made PCs and commodity servers.

This is American technology built with American manufacturing. In this day and age, that alone is exciting. This is electric cars -- not hybrids -- and they don't look like a Little Tikes Cozy Coupe. And the company is working to change nationwide infrastructure as well, and busting up the dealer middlemen that artificially inflate our auto prices. Fuck yes, I'd be happy to give them a tax break. They're actually doing something that might just benefit me as a citizen, a consumer, and an Earthling.

Re:Thanks, California taxpayers!

[amicusNYCL]

Tesla is not getting tax breaks for the Model S. They are getting tax breaks for manufacturing equipment. The Model S is not the only thing they build and sell with that equipment. Tesla batteries are used in the Smart car, the Mercedes B-class will use a Tesla powertrain, and they supply most of the guts for new Toyota RAV-4 EVs. It's a smart investment by California - they give Tesla a break on the equipment, and then get additional income from the increase in products that Tesla sells (both their own vehicles, as well as parts sold to other companies). It's not like they give Tesla the tax break and then never see anything from that money again.

Re:Why shouldn't it?

[Anonymous Coward]

First of all, they only market to the rich, which means the change in the carbon footprint generated by cars will be minimal at best.

Except that their plan is and has always been "sell cars to people in this income bracket, get money, use money to design/build cars to people in next bracket down, rinse and repeat".

Second, it doesn't take in to account the manufacturing process of the cars

Is there any evidence that their manufacturing is any more polluting that that of other cars?

or the electrical sources used to charge the batteries. Pushing the pollution off somewhere else is not a solution, it's just shifting the blame.

What you call "pushing the pollution off somewhere else" is in reality consolidating the sources of pollution, which makes it more manageable.

The Wealthy?

[CohibaVancouver]

Why is it if some guy in Arkansas drops $70K on a Ford F450 "dually" he's just a hard-working good ol' boy, but if someone in California buys a Tesla they're they wealthy elite? (I'd never spend over $30K on a car myself, but I just find the comparison interesting).

Re:Thanks, California taxpayers!

[tlhIngan]

Only if Tesla stays in CA after the free money handouts stop and the "pay back to the people who made you rich and successful" part starts. If they up and move their primary manufacturing centers to the next sucker --- oops, I mean, "forward-looking business friendly state" --- to offer them free money/power/impunity once CA's generosity runs out, that mini-Detroit could end up wherever the leader in the national race to the bottom happens to be.

Except setting up a brand new factory from scratch is expensive. Tesla is in their current location because Toyota, the previous owner, wanted out. So Tesla bought the entire factory for a good price with equipment in it.

The cost to move means having to either re-buy all the equipment again, or move the equipment. Both are very expensive options with the latter involving a whole system shutdown.

Boeing, despite having moved their head office, still makes planes in WA state where their head office used to be, because all the expertise and equipment is there.

Re:Oh thank christ

[LordLimecat]

We should subsidize SSDs with taxpayer money, is what youre saying. Works for me.

Re:Thanks, California taxpayers!

[AK Marc]

Did you realize that the "batteries" sold are not batteries, but battery packs, with electronics and cooling and such? Yes, the actual batteries may be made elsewhere, but the battery packs may still be made there. There's more to an automotive battery pack than a pile of 10,000 AA LiON batteries.

Re:Thanks, California taxpayers!

[ChrisMaple]

Individual businesses should not get tax breaks because it gives one business an "unfair" advantage over others. It's an open invitation for bribery and corruption. It's Fascism. It's a risk, and government shouldn't be taking risks with our money.