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Will Tesla Motors Inc (TSLA) Be Worth The $0.5 Billion In Subsidies?

Tesla Motors Inc (NASDAQ:TSLA)’s decision to open the Gigafactory in Nevada has brought some criticism to the table. Production capacity and market coverage were cited as causes that might trip the automaker on its upswing. Now, there’s a whole new set of stones to throw at the supposedly winning project, according to Governing.

Tesla Motors Inc (NASDAQ:TSLA)

The upside of the story is that Tesla Motors Inc (NASDAQ:TSLA) builds a Lithium-ion factory with a revolutionary capacity that will not be fully utilized in any close future because demand has a lot to grow. The $5 billion plan will also give some 6,500 jobs for the state. In essence, this should be a magnificent project about to launch, however there’re some tiny points that might turn the picture upside down.

Nevada will be spending about $0.5 billion to lure Tesla Motors Inc (NASDAQ:TSLA) within its borders. This can make one think that the car manufacturer’s choice among the states where to launch the Gigafactory was just a distraction, which worked like an auction to raise the amount of subsidies. There’s little evidence that could make the last accusation a verdict, however it raises questions as to the policymakers’ ability to foresee the future and the reliability of Elon Musk’s business.

Now, it’s impossible to get a constructive solution with these facts alone, so one need to take account that Tesla Motors Inc (NASDAQ:TSLA)’s new to a market, which has to bear its disruptive innovation. The company hasn’t even caught enough momentum to amaze. Its record of sale for the model S was 7,579 vehicles, which would be a very slow quarter for the already established car manufacturers like Ford Motor Company (NYSE:F) or General Motors Company (NYSE:GM). It actually would use some help, which no one wished to give but Nevada.

Possibly, legislators and policy makers should devote more time and powers to analysis, probably the need for funds make people to bargain conspicuously, but the project is in a certain way a sunk cost, so it will be difficult to change something from now.  Hopefully, Tesla Motors Inc (NASDAQ:TSLA)’s management is aware of the responsibility and will pursue its business plan with strict diligence. Anyways, we’ll be watching Elon Musk’s future deeds with uttermost attention.

Disclosure: none

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