How did Nevada do w/ Tesla?

Unanimously, the Nevada Legislature has passed a generous list of subsidies in order to lure the Tesla “gigafactory” to a site near Reno. A few thoughts follow:

1) Any and all special incentives are sub-optimal policy. The best thing to do is to have low taxes and reasonable regulations.

2) Nevada already has a right to work law and no personal or corporate income taxes. It is also the most logical location for such a factory as it is the closest to the company’s headquarters without being in California which has previously given the company outrageous incentives, but is generally not friendly to business;

3) Since Nevada is already business-friendly and offers the best location, it is hard to understand why Nevada’s politicians were so generous to the company, but they were. Tesla will pay no property or payroll taxes for 10 years, no sales and use taxes for 20 years, and will receive another $195 million in tax credits. The total loss to the treasury (not cost) is $1.3 billion. The good news is that taxpayers will NOT pay anything out-of-pocket for the factory as we at RGF advocated.

4) As generous as Nevada’s subsidies are, they are more economically-defensible than those given to New Mexico’s film industry or were given to Schott Solar or Eclipse Aviation.

That’s because it appears that most or not all of the Tesla subsidies will be in the form of tax breaks as opposed to outright expenditures of taxpayer dollars. It’s also because this battery factory is not entirely reliant on the success of one company. Rather, batteries are a growth industry and even in the absence of Tesla, the factory will likely be useful.

5) Where Nevada could really do well is in the spinoff industries that will likely locate near the gigafactory. These businesses will pay full-freight mostly in terms of taxes and should be plentiful.


Could the Nevada Legislature have driven a harder bargain and gotten a better deal? Probably. Will Nevada ultimately come out just ahead in the Tesla deal despite the very generous subsidy package? I’d also say “yes.”

Can New Mexico make the policy changes necessary to make itself competitive with states like Nevada and Texas? I hope so.