The executive points out that the package is not a $1.3 billion check written out to the company, but rather a series of long-term tax discounts that reduce its tax burden over a 20-year period. Tax rates will then revert unless the state drafts a separate offer.
“Of the $5 billion investment needed to bring the Gigafactory to full production in five years, state incentives will cover about 5%,” Musk wrote in a blog post. “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%.”
Tesla claims its Nevada facility will be the biggest and most advanced battery plant in the world, providing a “very large number” of high-paying direct and indirect jobs. The incentives are also performance-based, requiring Tesla to meet certain guidelines, such as hiring a certain percentage of Nevada residents, to receive the tax breaks.
“At Tesla, we believe in doing deals where both parties benefit, and, when there is an asymmetry or underperformance on our part, interpreting that in the other party’s favor,” Musk added.
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