Details on Tesla’s Gigafactory: Payroll May Top $370 Million Per Year

Tesla Roadster S. Photograph James Lipman / UK 07803 885275
Source: Tesla

After putting their heads down for a review of what bringing Tesla’s massive gigafactory to their state would mean, legislators in Nevada have started to come up with a few very promising figures. After courting five different states in a race to determine where Tesla would implement it’s huge facility, Nevada came out on top, with a headlining $1.3 billion tax-break package that Tesla ultimately chose much to the chagrin of Texas, Arizona, California, and New Mexico.

Tesla has estimated that the plant will cost about $5 billion before all is said and done, and it has roped in its current lithium ion cell provider Panasonic as a partner in crime to tackle the huge project. Once it’s up to its operating potential, the plant will employ 6,500 people, at least on paper, and generate enough lithium ion cells to make it the largest producer of lithium ion batteries in the world.

Nevada Governor Brian Sandoval said last week that Nevada’s winning Tesla’s facility and beating out four other states was a monumental moment, and added that it would change Nevada’s economic climate and spur as much as $100 billion in economic benefits for the state over the next two decades.

Now that they’ve had some time to analyze the impact that such a project would have on the state, some details are starting to emerge. By 2018, Tesla may be spending as much as $370 million in payroll, based on the hiring projections of 6,500 positions. Indirect employment — jobs not on Tesla’s payroll, but would benefit from the company’s presence — is estimated to have a positive impact of 16,200 jobs.

Source: Tesla

For its part, Tesla will be getting sales tax exemptions worth about $725 million through June of 2034, and have the opportunity to save more than $300 million in payroll and other taxes through 2024. It will also trigger $75 million in tax credits for up to 6,000 jobs created, $120 million for meeting state investment thresholds of $3.5 billion, and obtain reduced utility rates given the sheer amount of power this plant will likely gobble up. Tesla also said that it would contribute $37 million into the state’s education system.

Of course, the willingness of the state to hand out tax breaks has brought on its share of critics. “We think the 80-1 multiplier is disingenuous, and if that’s wrong, what else is wrong?” said Bob Fulkerson, the executive director of the Progressive Leadership Alliance of Nevada, referring to Governor Sandoval’s claim that the state’s investment would pay off at an 80-to-1 ratio.“Local governments are going to have immediate financial costs of public safety, trash collection, schools,” he added, “and existing residents and taxpayers are going to have to pay for that.”

The criticism has been largely bipartisan too; despite Sandoval’s Republican affiliation, conservatives are also hailing the deal as bad business for the state. “This deal amounts to nothing more than a tax handout for a politically connected billionaire,” Americans for Prosperity state director Daryn Iwicki said in a statement.

Regardless of what it means for Nevada specifically, Tesla’s intent to invest as much as it is spells good news for the EV industry, and the American economy as a whole. If it can succeed in bringing down the price of battery cells, then America may become the hub of the rapidly growing electric vehicle industry.