What Will Tesla Gigafactory Cost Nevada? How About $1.3 Billion?


Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

Rendering of Tesla battery gigafactory outside Reno, Nevada, Sep 2014

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Nevada will become the site of Tesla Motors' first battery gigafactory, and that's partially because of the incentives package lawmakers will offer the company.

The factory is expected to cost around $5 billion, but how much will it cost the state?

The tax breaks and other incentives officials plan to offer Tesla could add up to $1.3 billion, according to a new report from the Denver Post.

The majority of that package--up to $1.1 billion--would finance the abatement of Tesla's property, sales, and use taxes in the state, in some instances for up to 20 years.

ALSO SEE: Tesla's Nevada Gigafactory: Elon Musk, Brothel Owner, State Work Toward Deal

In addition, the Nevada legislature plans to extend electricity discounts for Tesla and other large companies, as well as explicitly legalize Tesla's direct-sales business model.

Opposition to company-owned stores was one of the problems identified by Tesla in Texas during the five-state competition for the gigafactory, which also included Arizona, California, and New Mexico.

Project Tiger site at USA Parkway Business Park, Reno--for Tesla gigafactory? [photo: Bob Tregilus]

Project Tiger site at USA Parkway Business Park, Reno--for Tesla gigafactory? [photo: Bob Tregilus]

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Such a large investment of taxpayer money into a single company's project has some concerned, leading to appropriately casino-related sayings about "betting the house."

These critics appear to be in the minority, as the legislature is expected to approve the incentives package before the end of the week.

Despite the large price tag, supporters argue the gigafactory's economic benefits will make incentivizing Tesla worthwhile.

MORE: 'Tesla Hunger Games': Are States In 'Race To Bottom' For Gigafactory?

A study commissioned by the Nevada governor's office (via MarketWatch), gigafactory will directly create 6,500 jobs and indirectly create 16,200 jobs.

The study claims Tesla will spend $370 million on payroll per year, while Governor Brian Sandoval recently said the gigafactory will generate up to $100 billion for Nevada's economy over the next 20 years.

So while Nevada is making a big bet on Tesla, it expects a big payoff.

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