Today is the day when Nevada’s lawmakers will closely look at the deal that they finalised with Tesla Motors Inc (NASDAQ:TSLA) last week, namely the contract for its $5 billion Gigafactory. Reuters‘ Sandra Chereb looked at what has been said about the deal so far.
Mixed opinions have surfacedamong politicians about Tesla Motors Inc (NASDAQ:TSLA)’s joint venture in Nevada as the company sought some controversial tax breaks which are estimated near $1.3 billion.
Republican Governor, Brian Sandoval, proclaimed the deal to be a huge success and an economically huge win for Nevada as the State battled with four other states to win the bid for the Gigafactory. Reuters cited him mentioning figures like $100 billion in economic benefits for the state over the course of 20 years and the more controversial 80-1 payoff ratio on the state’s investment. Chereb pointed out that critics have branded this ratio as wishful thinking which in turn has also raised eyebrows over other details of the deal with Tesla Motors Inc (NASDAQ:TSLA).
Critics of the deal have also voiced it as a mere tax handout to Elon Musk, CEO of Tesla Motors Inc (NASDAQ:TSLA), owing to his political connections, according to Reuters. They went as far as to call it a tax welfare, which would have substantial immediate financial costs for the state in terms of public safety, trash collection, and schools. Bob Fulkerson, executive director of the Progressive Leadership Alliance of Nevada was quoted on the mention of the above additional costs, which he thought that Sandoval hadn’t correctly incorporated in his model.
Tesla Motors Inc (NASDAQ:TSLA), which has partnered with Panasonic Corporation (ADR) (OTCMKTS:PCRFY) in producing its next model of electric cars by 2017, is set to receive $725 million through June 2034, save at least $300 million in payroll taxes through 2024, receive $75 million in tax credits for up to 6,000 jobs created, $120 million for meeting $3,5 billion investment threshold, and enjoy reduced utility rates under the Gigafactory deal, according to Chereb.
Sandoval, on the other hand, was quoted as saying that the 20% boost in GDP for the state that his office predicted will come on top of the 3,000 construction-related and 16,000 indirect jobs that this project will create. Tesla Motors Inc (NASDAQ:TSLA) for its part has also promised to contribute over $37 million during the next five years to Nevada’s education system, the source added.