CARSON CITY — A package of tax breaks worth more than $330 million for electric vehicle manufacturer Tesla won the unanimous approval of a state board Thursday, clearing the way for the company to begin a $3.6 billion expansion of its Gigafactory in Storey County.
Led by Gov. Joe Lombardo, the 12-member Governor’s Office of Economic Development board voted 8-0 in favor of the deal, which analysts from GOED said would net the state more than $766 million in new tax revenue over the next 20 years. That’s a 115-to-1 return on investment, GOED Deputy Director Bob Potts said.
“It is my opinion as the governor of the state of Nevada that this is very beneficial across the board, both in economic development and to build on the quality of life for every Nevadan,” Lombardo said.
Tesla ultimately received three abatements, which are temporary discounts or reductions of tax liability, for the expansion. The company, led by billionaire CEO Elon Musk, will receive 100% abatements on the modified business tax, in addition to personal and real property taxes through the next 10 years.
Rohan Patel, Tesla’s senior global director of public policy, said Nevada lawmakers took a huge bet when the Legislature passed more than $1 billion in abatements in 2014 to land the first Tesla Gigafactory, the giant manufacturing facility that produces lithium-ion batteries and components for Tesla’s electric cars.
“What has happened since then is a real transformation of the world’s transition to sustainable energy and transport,” Patel said. “And that is happening because of the first Gigafactory that we constructed and built here in Nevada.”
According to the application submitted to GOED, Tesla intends to break ground in May, with estimated completion in May 2026 for the 4 million-square-foot expansion. It will add a battery manufacturing plant to the facility to produce its 4680 battery cell, as well as an assembly site for the Tesla Semi, an electric semi-truck the company boasts can travel 500 miles on a single charge. The cell plant would allow Tesla to make batteries for more than 1.5 million light-duty vehicles annually.
Once completed, the Gigafactory expansion is expected to create 3,000 new permanent jobs with an average wage of $33.49 per hour, according to Tesla’s application. That’s on top of an additional 3,655 jobs expected to be created elsewhere in Nevada between 2023 and 2042 to support the expanded factory and 15,133 construction jobs expected to be created now through 2027 to build the expansion.
Secretary of State Cisco Aguilar, a voting member of the GOED executive board, pressed Tesla officials on whether they would pay construction workers contracted for the project Washoe County’s prevailing wage, which is a union-brokered labor agreement for certain public works projects. Although Tesla is not legally compelled to pay prevailing wage, Patel said the company was committed to paying all contractors a fair wage.
The application says Tesla will pay 91% of health insurance benefits for each new employee and other benefits like paid leave, paid disability, free mental health services, parental and adoption leave and 401(k) matches. The Nevada Gigafactory’s workforce is expected to top 10,000 once the expansion is completed.
That 10,000 is just the start, and the ultimate goal is to over-deliver on these promises, Patel said. “We are being very conservative in terms of the numbers we have put forward,” he said.
Chris Reilly, Tesla’s director of recruiting and workforce development, said the company was going to expand on robotics education programs in local K-12 schools, classes at UNR designed for employees to advance in the company, as well as housing, carpool and childcare options.
Tesla is committed to assisting in the “acceleration” of 200 affordable housing units within a 45-minute commute of the Gigafactory, Reilly said.
The company is also investing in an independent, third-party child care facility that will offer services at a reduced rate for employees and will also be open to the public.
“We’ll report on that (to the state) annually,” Reilly said, noting the company and state will work with a third-party, independent auditor to ensure Tesla’s obligations are being met.
In 2014, Tesla made a similar $3.5 billion investment to break ground on its Nevada Gigafactory, a 5.4 million-square-foot facility with enough capacity to manufacture about 500,000 electric vehicle batteries each year. The company got more than $1 billion in abatements, including hundreds of millions in transferable tax credits.
Some of the abatements from the 2014 package are set to expire later this year, meaning the company will begin paying personal property taxes to Storey County in 2024. This new round of tax breaks does not extend what was negotiated in 2014, but will be applied to the new development, Lombardo said.
“Those abatements have come to their fruition and, subsequently, Washoe and Storey and associated counties will start receiving the revenue based on those abatements,” Lombardo said. “And to provide clarification, this second package is only one-third of the first package. So we’re not continuing, we’re not escalating the benefits, per se, when GOED makes these decisions.”