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Estimates show Tesla eligible for $10 million in tax credits

CARSON CITY — Preliminary estimates indicate Tesla is eligible for nearly $10 million in transferrable tax credits based on its investments so far in a huge battery factory east of Reno, Nevada lawmakers were told Monday.

Steve Hill, director of Governor’s Office of Economic Development, said an audit being conducted by an outside firm will confirm the company’s own calculations on spending and meeting benchmarks required to receive the tax credits.

The audit, he said “will be used to calculate the first transferrable tax credits on the project.”

To date Tesla has invested $183 million in the $5 billion, 5 million square-foot factory being built in the Tahoe-Reno Industrial Center in Storey County, about 20 miles east of downtown Reno.

During the second quarter, 721 construction workers were employed at the site, and 70 percent were Nevada residents, Hill told members of the Legislative Commission. Since the project began last year, the project has employed a total of 1,465 construction tradesmen, with 73 percent being Nevadans.

The project is a joint venture between Palo Alto, Calif.-based Tesla Motors headed by billionaire Elon Musk and Japan’s Panasonic Corp.

The 36 permanent employees hired to oversee operations as the project moves from the construction phase toward battery production received wages totaling $1.4 million during the second quarter.

“If these numbers are accurate and exactly reflected in that audit, the 36 employee would generate $12,500 apiece in transferrable tax credits,” Hill said, or $450,000 total.

Additionally, the $183 million invested so far makes the project eligible for about $9.3 million in transferrable tax credits through June 30 of this year, he said.

The tax credits were part of a $1.3 billion incentive package passed by state lawmakers and signed by Gov. Brian Sandoval during a special session in September 2014. The deal helped lure Tesla to Nevada after a high-stakes bidding war with other states.

The factory, which will manufacture lithium-ion batteries, is key to Tesla’s goal of mass producing more affordable electric cars. Earlier this year, the company also said it will manufacture stationary power storage packs at the site.

The technology will allow businesses and homeowners to store solar-generated power for use at night or on days when the sun doesn’t shine.

Chief Executive Elon Musk recently told analysts that Tesla Motors Inc.’s new storage battery business could generate “a few billion dollars” in revenue in 2017, and Tesla Chief Technology Officer J.B. Straubel said the Nevada battery plant is “on track” for production startup in early 2016, Reuters reported.

Chief Financial Officer Deepak Ahuja said the company may not be cash-flow positive until early 2016, Reuters also reported. Previously, Musk said he expected to see positive cash flow by late 2015.

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

 

 

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