The Giga Factory is a Go!!

Americans who want a government that gets things done should take a look at the state of Nevada. Both Houses of Nevada’s state legislature passed special legislation to grant a $1.3 billion package of tax breaks for Tesla’s Giga Factory in a special session on Sept. 11.

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The Senate passed the bills Tesla wanted 21-0, and no Senator spoke against it. One Senator spoke for it and a few assembly people spoke on it. The bill also demonstrates the kind of bipartisanship lacking in Washington D.C. these days. The deal to create the tax breaks was negotiated by Gov. Brian Sandoval, a Republican, and approved by a Democratic state legislature.

Actually, four bills were passed by the state legislature:

  • Assembly Bill 1 gives Tesla eight years of discounted electricity from NV Energy. This will be financed by an increase in the bills of all other electricity customers in Northern Nevada. The Reno Gazette Journal reported that this will raise the average electric bill by around $1.52 a year.

  •  Assembly Bill 2 gave electric car manufacturers the right to sell directly to the public. Many U.S. states have laws that ban direct sales by car dealerships. This prevents Tesla’s sales model from using direct sales through stores rather than dealerships. The model isn’t as revolutionary as Tesla claims: Packard used a similar sales model in the first few decades of the 20th Century Texas may have lost the Giga Factory because car dealers there successfully blocked such a move in the Lone Star State’s legislature.

 

  • Assembly Bill 3 eliminates a tax break for insurance companies that move their headquarters to Nevada. The break is designed to cover losses in revenue from Tesla.

 

  • Senate Bill 1 grants the tax breaks and approves construction of a new road to connect the Giga Factory site to U.S. Highway 50 and I-80. It also eliminated a package of tax breaks for the film industry.

 

The tax breaks are far from a done deal. Insurance industry Jim Wadhams told The Reno Gazette Journal that he plans to lobby the legislature to restore his industry’s breaks. A group of state senators complained that not enough money is going to the public school system.

State Senator Debbie Smith (D-Sparks) said she will push for more money for school infrastructure when the legislature reopens next year. Smith was concerned because the Giga Factory could bring 6,200 jobs to the region (Sparks is a Reno suburb) and thousands of new children to Reno’s schools. Smith didn’t say what she would do, but she is probably pushing for more taxes to finance school construction.

State Senator Debbie Smith (D-Sparks) said she will push for more money for school infrastructure when the legislature reopens next year. Smith was concerned because the Giga Factory could bring 6,200 jobs to the region (Sparks is a Reno suburb) and thousands of new children to Reno’s schools. Smith didn’t say what she would do, but she is probably pushing for more taxes to finance school construction.

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Some other companies could win from the deal, including Mason Graphite Inc. (LLG), a Canadian company that owns a Lithium Mine in Silver Peak, Nev. Seeking Alpha commentator Randy Carson noted that the legislation approved on Sept. 11 requires the state of Nevada to build a direct road connection between the Giga Factory and U.S. Highway 50, which runs past Silver Peak. That’s important because lithium is the main ingredient in Tesla’s batteries.

Another big winner is the Union Pacific Railway (UP). The UP’s main line runs right past the Giga Factory site. Since most cars are shipped to market by rail, Tesla will be one of its big customers. The UP will also haul in a lot of the material used at the factory.

Residents of Nevada are already expecting a housing boom in the Reno region. Several developers are planning large subdivisions to fuel the need for housing for Tesla workers. The impact is already being felt in the area because work on the foundation for the factory is already underway. At least 4,000 workers will be employed in the plant’s construction.