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Tesla Gets $34 Million Tax Break, Adds Capacity For 35,000 More Cars 238

Posted by Soulskill
from the ramping-things-up dept.
cartechboy writes "The state of California will give Tesla Motors a $34.7 million tax break to expand the company's production capacity for electric cars, state officials announced yesterday. Basically, Tesla won't have to pay sales taxes on new manufacturing equipment worth up to $415 million. The added equipment will help Tesla more than double the number of Model S sedans it builds, as well as assemble more electric powertrains for other car makers. In addition to continued Model S production, Tesla plans to introduce the Model X electric crossover in late 2014, as well as a sub-$40,000 car — tentatively called Model E — that could debut as soon as the 2015 Detroit Auto Show. It turns out California is one of the few states to tax the purchase of manufacturing equipment — but the state grants exemptions for 'clean-tech' companies."
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Tesla Gets $34 Million Tax Break, Adds Capacity For 35,000 More Cars

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  • Elon's next company should be called "FusionX" that creates portable breeder reactors. It would be a nice addition to his current portfolio of cars and rockets.
    • by rossdee (243626)

      That should be FissionX, fusion is a whole different energy source.

      • by zlives (2009072)

        it doesn not matter how the technology works, what the technology is or if the technology works... if it sounds good enough FTB will come after me for a sock i purchased outside the state to give tesla a break.

        damn... i sound like a tea bagger lol

      • Not that fusion is as far off as people think it is. There are some really promising experiments other than the big ones, that seem single digit years away from usable designs.

        • by zlives (2009072)

          source please, would love to read and keep the hope alive :)

          • I believe he's talking about cold fusion, aka LENR (Low Energy Nuclear Reactions), not the hot fusion tech that has gobbled perhaps one trillion dollars worldwide (in today's dollars) since research on hot fusion started in the 1960s.

            Considering LENR is considered voodoo science, essentially banned from using govt money in all countries that are large producers of fossil fuels (specially USA, UK, Canada and Australia), I'd say return on investment in LENR research is about one million times better than hot

            • by Luckyo (1726890)

              Wasn't Rossi the guy who couldn't decide what his invention actually is? At one point its "cold fusion", next it's weak atomic powers", next it's something else.

              All of these connected by the fact that his "inventions" appear to be in direct conflict with currently accepted laws of physics. So it's a chance that one guy actually invented something that completely revolutionizes nuclear physics as we know it, as opposed to him being a hack who is after easy money.

              Considering that he hails from Milan, has conv

              • by macpacheco (1764378) on Thursday December 19, 2013 @01:49AM (#45733503)

                I used to be his cheerleader, not anymore.

                But I'm still waiting for proof he's a total scam. Also waiting to proof that his product is for real as well.

                He did give his reactor a chance to be tested for what 48hrs by some very sharp scientists, the test results were published, they couldn't peek inside, but they could futz around with all external connections all they wanted. No hidden wires found, no weird electrical signal hiding the energy. And the reactor is too small for anything but a nuclear reaction.
                Before that test, I was pending back to he's a fraud, now I just don't know.

                Fleishman & Poons experiment also appears to be in direct conflict with currently accepted laws of physics, so I my books, it's the laws of physics that need revisiting, and until those can be reconciled, I believe we can't use the laws of physics to rule out the e-cat as a fraud.

                In my view, he has one last year to deliver.

                I have to warn you that I also see a bunch of very rabid people that probably has some seriously vested interest in the billions being wasted in my opinion on fusion and others employed by the dirty energy lobby that I see your testimony just as questionable as Mr. Rossi's work.

        • by tedgyz (515156)

          Like holographic memory? That has been single-digit years away for decades.

        • by dpilot (134227)

          It's not that far off - in only 20 years we'll have fusion power.

          Just as it's been for the past 30 years or so.

      • Get the reactor small enough to run a car and break out the "Gone Fission" bumper stickers!
        This could put an end to tailgating drivers... one way or another...
    • And after that, devices to capture ghosts, right?

  • by TWiTfan (2887093) on Wednesday December 18, 2013 @05:29PM (#45730165)

    The rest of us are grateful for your generous contributions to our new luxury cars.

    • by grogdamighty (884570) on Wednesday December 18, 2013 @05:36PM (#45730263) Homepage
      Meanwhile, if Tesla revolutionizes the modern car and creates a mini-Detroit (Golden Age, not now), I'm pretty sure California's taxpayers will be happy with the investment.
      • by Anonymous Coward on Wednesday December 18, 2013 @05:51PM (#45730449)

        Only if Tesla stays in CA after the free money handouts stop and the "pay back to the people who made you rich and successful" part starts. If they up and move their primary manufacturing centers to the next sucker --- oops, I mean, "forward-looking business friendly state" --- to offer them free money/power/impunity once CA's generosity runs out, that mini-Detroit could end up wherever the leader in the national race to the bottom happens to be.

        • by Ralph Wiggam (22354) on Wednesday December 18, 2013 @06:38PM (#45731057) Homepage

          Moving a factories costs a fortune. Giving tax breaks in exchange for job creation is standard practice at the state and local levels across the US.

        • by Carnivore (103106) on Wednesday December 18, 2013 @06:52PM (#45731229)

          The Fremont factory is enormous. They're only using a fraction of it for Model S production, with plans to activate more of it for Model E, etc.

          Given that they own a building that exists and will support their needs for the near- to medium-future, it's unlikely that they would move.

          • by pepty (1976012)
            That and assembly jobs start at $12-$16 an hour; they wouldn't save much by moving to a red state.
        • by tlhIngan (30335) <(ten.frow) (ta) (todhsals)> on Wednesday December 18, 2013 @07:04PM (#45731339)

          Only if Tesla stays in CA after the free money handouts stop and the "pay back to the people who made you rich and successful" part starts. If they up and move their primary manufacturing centers to the next sucker --- oops, I mean, "forward-looking business friendly state" --- to offer them free money/power/impunity once CA's generosity runs out, that mini-Detroit could end up wherever the leader in the national race to the bottom happens to be.

          Except setting up a brand new factory from scratch is expensive. Tesla is in their current location because Toyota, the previous owner, wanted out. So Tesla bought the entire factory for a good price with equipment in it.

          The cost to move means having to either re-buy all the equipment again, or move the equipment. Both are very expensive options with the latter involving a whole system shutdown.

          Boeing, despite having moved their head office, still makes planes in WA state where their head office used to be, because all the expertise and equipment is there.

          • by aaarrrgggh (9205)

            Boeing, despite having moved their head office, still makes planes in WA state where their head office used to be, because all the expertise and equipment is there.

            ...for now. They want to move the 777X, and they split production with South Carolina.

    • Re: (Score:3, Insightful)

      by AK Marc (707885)
      Presuming some sarcasm in there, does this mean you refuse to fly? After all, Boeing and Airbus both get direct subsidies greater than Tesla. Or is it OK when a standard tax break is given to Boeing, but not for Tesla? $9 billion is greater than $34 million. By more than $10!
      • by zlives (2009072)

        i think he means that the product is geared towards mid-to-upper class buyers and basically all (including poor) taxpayers are subsidizing it. It would be like apple getting subsidies for the gold iPhone.

        • by amicusNYCL (1538833) on Wednesday December 18, 2013 @06:05PM (#45730665)

          Tesla is not getting tax breaks for the Model S. They are getting tax breaks for manufacturing equipment. The Model S is not the only thing they build and sell with that equipment. Tesla batteries are used in the Smart car, the Mercedes B-class will use a Tesla powertrain, and they supply most of the guts for new Toyota RAV-4 EVs. It's a smart investment by California - they give Tesla a break on the equipment, and then get additional income from the increase in products that Tesla sells (both their own vehicles, as well as parts sold to other companies). It's not like they give Tesla the tax break and then never see anything from that money again.

    • by Twinbee (767046)
      They're likely unveiling the Model E, perhaps half the price, at the Detroit Auto Show in Jan 2015.
    • We get it back on taxes every (small) Tesla employee pays, every local supplier, and even the sandwich shop down the street.

    • by Dahamma (304068)

      Except Tesla is *profitable* and wants to expand and *increase* that profitability. $35M will be peanuts to CA in a couple of years if Tesla keep growing at their current pace and paying corporate taxes (not to mention the job creation, cash infusion into the CA economy, etc).

      So, yeah, wow, that $1 per CA citizen tax break is going to be a disaster...

  • Why shouldn't it? (Score:5, Insightful)

    by fisf (2677113) on Wednesday December 18, 2013 @05:32PM (#45730205)
    Unless you value your environment nothing, why shouldn't there be a financial reward for companies that reduce the harm on it, either directly or indirectly?
    • Re: (Score:2, Informative)

      by Anonymous Coward

      There is nothing wrong with holding dirty industries accountable for the environmental damage they cause. Should they get a free pass on externalizing costs, granting them an economic distortion that gives them an unfair advantage? You as the tax payer ultimately foot the bill for environmental damage through cleanup costs, reduced quality of living, increased healthcare costs.

      Tax breaks for green industries aren't handouts. They're just leveling the playing feild.

      For that mater Tesla is the leader and majo

  • by lxs (131946) on Wednesday December 18, 2013 @05:33PM (#45730223)

    Big corporations are evil because they don't pay their taxes unless it's our pet company in which case it's all wine and roses.

    • by SirGarlon (845873)
      I think you've articulated the fundamental problem in today's tax policies very succinctly.
    • by Mousit (646085)
      In and of itself, not paying taxes is not what makes corporations (big or small) evil. It has much more to do with what they use it for and how they go about it.

      Exxon and GE, as examples, are rather famous for not paying anything on their recent profit/income taxes (or even getting billions in rebates, in GE's case) while at the same time raking in world-record-breaking profits, and then taking that extra cash and simply lining the executives' pockets by paying out huge bonuses. They also downplay or ev
  • This is great news for me and my shares in TSLA. :D

    • by Twinbee (767046)
      The stock price went down a little actually today so far.
      • daily variation is not important, long term trending is.
        • by Twinbee (767046)
          Yes, I know that, but I replied because one might expect the news to make Tesla shares shoot up (the market would account for long term as well as short term, so the stock price would reflect that).
    • by lgw (121541)

      Tesla's market cap is 25% of Ford's. I really wish them the best, but the stock already prices in insane growth from where they are now.

  • Horrah!! (Score:4, Insightful)

    by Capt James McCarthy (860294) on Wednesday December 18, 2013 @05:42PM (#45730315) Journal

    Another business that can't survive without tax payer money to help keep the costs down on a vehicle that only wealthy folks can afford. Brilliant.

    • by zlives (2009072)

      hey now... it takes money to bribe the government.

    • by AK Marc (707885)
      Like Boeing? They were offered about $9 billion.
      • Like Boeing? They were offered about $9 billion.

        Yea, just like that.

        Two wrongs don't make a right.

        • by AK Marc (707885)
          States rights is good, until a state does something we don't like. Also, tax breaks are bad, but we'll whine louder when it's a company/CEO we don't like.
      • The 9 billion was a government bribe to Boeing to protect the unions that would otherwise have driven Boeing to union-free states in the American southeast. Typical of government action, a huge amount of money is being spent to provide a much smaller benefit to a special-interest-group.
    • Re:Horrah!! (Score:5, Insightful)

      by magarity (164372) on Wednesday December 18, 2013 @05:48PM (#45730403)

      RTFA - The state the company is located in is one of the few with the madness to tax manufacturing equipment. There's a policy guaranteed to help lower unemployment! /sarcasm. In this particular case they're not surviving on taxpayer money - they're getting a sensible exemption from an absurd policy.

      • by zlives (2009072)

        the policy exists to help transition manufacturing to areas where labor can be more easily exploited. Guess they are now realizing that perhaps that was not a wise long term policy. but don't worry this sensibility will soon pass.

    • by tlambert (566799)

      Another business that can't survive without tax payer money to help keep the costs down on a vehicle that only wealthy folks can afford. Brilliant.

      At least this time, we got off for 1/30th of what Solyndra cost us, and we get jobs out of it.

    • Re:Horrah!! (Score:5, Insightful)

      by Bacon Bits (926911) on Wednesday December 18, 2013 @06:03PM (#45730637)

      The last step in making technology cheap enough for everyone is not something fresh out of R&D. It's something established that isn't cheap enough for everyone being refined and perfected and improved upon to suddenly be cheap enough for everyone. IBM and DEC didn't start out with commodity hardware. They made mainframes, then they made minicomputers, and then they made PCs and commodity servers.

      This is American technology built with American manufacturing. In this day and age, that alone is exciting. This is electric cars -- not hybrids -- and they don't look like a Little Tikes Cozy Coupe. And the company is working to change nationwide infrastructure as well, and busting up the dealer middlemen that artificially inflate our auto prices. Fuck yes, I'd be happy to give them a tax break. They're actually doing something that might just benefit me as a citizen, a consumer, and an Earthling.

    • by Jeremi (14640)

      Another business that can't survive without tax payer money to help keep the costs down on a vehicle that only wealthy folks can afford. Brilliant.

      And above is another example of someone who can't think past next quarter's profit report.

      Fortunately, there are people who can, and they've come to the realization that transitioning away from 100% reliance on fossil fuels is a good idea, and will benefit everyone in the long run.

    • Don't know why you're being modded insightful. This is a common way for municipalities and states to incentivize companies to expand, stay in their current location, or move to a new location. It's common practice. The assumption is that the tax revenue will be recouped through secondary and tertiary sources: suppliers building plants and warehouses near the factory, increased employment resulting in increases in local property taxes and increased sales at surrounding businesses, etc.
  • Models... (Score:5, Funny)

    by SeanBlader (1354199) on Wednesday December 18, 2013 @05:51PM (#45730453)
    Surprised no one posted that Tesla will have Models identified as S, E and X when these are all rolled out.
  • by Trepidity (597) <delirium-slashdo ... org minus author> on Wednesday December 18, 2013 @05:56PM (#45730523)

    With a value-added tax (VAT), if you buy $150 of intermediary stuff, and use it to produce $200 of stuff, the tax is levied on $200 in total value, which is charged as $150 on the first sale and $50 to the second sale. If you buy equipment that is producing goods or more equipment, you only pay sales tax on the incremental value added, not on the cost of the machinery.

    With a sales tax, you either charge on both sales for the full amount, in which case a $200 product has paid sales tax on $350 worth of sales in this example, or you do special-case exemptions, such as exempting "manufacturing equipment" from sales tax entirely, as some states do. Sales taxes are also more brittle because since the entire tax on charged on the final retail transaction, it encourages black-market no-sales-tax sales.

  • The Wealthy? (Score:4, Insightful)

    by CohibaVancouver (864662) on Wednesday December 18, 2013 @06:30PM (#45730967)
    Why is it if some guy in Arkansas drops $70K on a Ford F450 "dually" he's just a hard-working good ol' boy, but if someone in California buys a Tesla they're they wealthy elite? (I'd never spend over $30K on a car myself, but I just find the comparison interesting).
    • by 0123456 (636235)

      Why is it if some guy in Arkansas drops $70K on a Ford F450 "dually" he's just a hard-working good ol' boy, but if someone in California buys a Tesla they're they wealthy elite?

      Let me guess: the first is buying his pickup because he needs it for his job, while the second is buying his Tesla because he'd be embarrassed to be seen in a Civic?

      • A guy buying a truck for his job, isn't going to buy the $70k truck, he's going to spend $45-50k on an F450 (if and only if he actually needs that much payload capacity), to keep his costs down.

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