Audit shows Tesla met requirements for tax breaks in Nevada

CARSON CITY — Independent auditors concluded Tesla Motors Inc. met all conditions for tax abatements and credits during the eight months after lawmakers approved the perks in a special 2014 legislative session.

The audit by accounting firm Grant Thornton calculated Tesla has earned $9.6 million in transferable tax credits for the period Oct. 17, 2014, through June 30.

Tesla, in partnership with Panasonic Corp., is building a $5 billion lithium battery factory east of Reno in the Tahoe Reno Industrial Center. To lure the electric carmaker led by billionaire entrepreneur Elon Musk to Nevada, state lawmakers last year approved $1.3 billion in tax abatements and other incentives.

Included in the abatement package is $195 million in tax credits, made available as spending and hiring benchmarks are met, that the company can sell to other companies to reduce their own tax liabilities to the state. Tax credits are available in the amount of $12,500 for each qualified employee hired. At least 50 percent of employees must be Nevada residents.

The audit said the residency and a minimum average wage of $22 per hour were met "without exception."

Grant Thornton, in its report, said the project has hired 24 employees and 16 are Nevada residents, for a residency percentage of 67 percent. The employee tax credit for the period totaled $300,000.

The average hourly wage was $94.26, which does not include construction workers.

Besides tax credits for employees, Tesla is allowed tax credits equal to 5 percent of the first $1 billion invested in the state, and 2.8 percent on the next $2.5 billion. Tesla's capital investment for the period was $186 million, making it eligible for $9.3 million in tax credits.

During the reporting period, 1,348 construction workers were on the site and 68 percent were Nevada residents, the audit said.

Any company that locates in Nevada and makes a minimum $3.5 billion capital investment is entitled to the same tax breaks afforded to Tesla.

Those perks are far greater than the ones granted last week to lure electric carmaker Faraday Future to Southern Nevada.

Faraday said it plans to build a $1 billion manufacturing plant at the Apex industrial site in North Las Vegas. That investment level is about one-third of Tesla's commitment.

Nevada lawmakers, called into special session by Gov. Brian Sandoval, on Dec. 19 approved a "second tier" package of abatements and tax credits for Faraday and any company that comes to the state with $1 billion in capital investment.

Faraday's available tax credits are limited to $7.6 million annually and capped at $38 million total. Faraday will accrue tax credits at a rate of $9,500 per qualified employee.

— Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @sandrachereb.