Remember that “big victory” we heard about recently for the state of Nevada? You know, the one where Tesla Motors announced that they would build their huge, $5 billion, high-tech battery factory in Nevada vice California, Arizona, Texas, or New Mexico?
Well, that victory apparently came with a price: somewhere between $2 billion and $3 billion in tax incentives from Nevada. That works out to somewhere between 50 and 60 percent of the cost of building the Tesla-owned facility.
From Tesla’s latest regulatory filings:
The total capital expenditures associated with the gigafactory through 2020 are expected to be $4-5 billion (sic), of which approximately $2 billion is expected to come from Tesla.
And where will the rest of the money to build for the factory come from? Nevada taxpayers will be on the hook for it. That’s kinda how tax incentives work.
There are a few other things about the deal that would bother me if I were a Nevada resident, too. Like the fact that Tesla currently has roughly $2.6 billion in cash – and around $4 billion in liabilities.
There’s also this:
“Tesla has also disclosed its overhead costs are now rising 20% on a year-over-year basis, and research and development expenses are increasing 30%.”
Finally, Tesla’s current business plans project that they’ll be making (and, presumably, selling) 500,000 electric vehicles annually by 2020. Tesla also expects their new battery factory to reduce costs of battery pack production vis-à-vis current sources by more than 30% per-killowatt-hour.
Somehow, I just don’t see both of those happening.
Hey, I hope this works out for the good people of Nevada. But I can’t help thinking – based on what we’ve seen from other similar “green energy” boondoggles efforts going belly-up over the past few years – is that there’s a better-than-even chance they’ll end up quoting Pyrrus of Epirus concerning the Battle of Asculum:
“One more such victory, and we shall be undone.”
