Nevada Special Session Paves Way for Gigafactory

Nevada is one of the few states whose legislature typically meets once every two years, in contrast to the vast majority, which hold a legislative session once per year. While they are generally not scheduled to meet in even-numbered years, earlier in September Nevada legislators were suddenly called to work in a special session by Republican Gov. Brian Sandoval. The issue? To pass a massive tax incentive deal for Tesla Motors as a reward for choosing the state at the site of a massive new lithium-ion battery producing gigafactory.

After months of speculation and jockeying by southwestern states to curry favor and self-promote, it was announced on September 3 that the state would be the site of Tesla Motors new gigafactory, a massive $5 billion manufacturing facility that the all-electric motor vehicle manufacturer will use to create batteries for its popular and industry-leading electric-powered motor vehicles. While the automaker had previously hinted that they would like to have 10 percent, or $500,000 of the bill to construct the facility footed by the state, Nevada went above and beyond to cater to Tesla during the special session, pledging an estimated $1.25 billion in numerous tax incentives and breaks in order to win the nod of approval. As part of the deal, the state has reportedly agreed to waive property taxes on the factory through 2024 and all sales taxes levied on the factory through 2034, provide tax credits for each full time job created in the state and offer transferrable tax credits on further investment in the state by the Manufacturer. The fact that Nevada does not currently levy a corporate sales tax also undoubtedly played a role in the company’s decision making process.

The project itself has been described as one of the biggest economic development and manufacturing wins for an area in U.S. history and the largest project in the state since the Hoover Dam. The factory is expected to create up to 6,500 jobs in the state and at its peak supply batteries for 500,000 electric motor vehicles per year by 2020. “This factory is very important for the future of Tesla, because without it we can’t do the mass market car,” said Tesla Motors CEO Elon Musk.

The last important detail of the package included an agreement to lift the ban on direct manufacturer-consumer motor vehicle sales in Nevada, an issue which has been a thorn in Tesla’s side for years. Many states currently require vehicles to be sold through a franchised dealer rather than directly by the manufacturer; effectively outlawing Tesla from doing business in many states. Tesla has been intent on bucking that trend and selling vehicles directly to interested consumers and has seen legislative success in many states, such as New Hampshire which lifted the ban in 2013. While this legislative victory paves the way to more modern, mainstream success in the American motor vehicle market, the company still has many policy-driven hurdles to overcome before they become commonplace on U.S. roads.