Tesla Motors Inc. (TSLA) Facing Gigafactory Incentive Opposition from Budget Watchdogs


Tesla Motors Inc. (NASDAQ:TSLA)’s $5 billion Gigafactory continues to be the most talked about project in the auto industry due to the economic benefits that  it  is set to offer anywhere it will be constructed. San Jose Mercury News reported that budget watchdog committees in five proposed states, where Tesla might eventually build its Gigafactory, have written an open letter to their governors, asking them to avoid giving too much incentives to corporations seeking to kick start projects under their jurisdictions.

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There is no doubt that Tesla Motors Inc. (NASDAQ:TSLA) would prefer to construct the battery factory in a state where the economic benefits are bigger. Arizona, California, Nevada, as well as New Mexico and Texas are the five states whose governors have come under scrutiny from the budget watchdogs for pursuing Tesla Motors Inc. (NASDAQ:TSLA) to build its plant by offering different incentives such as tax breaks.

The watchdog committees maintain that despite the battery factory being a big project that will have an economic impact on any state, a bigger price might be paid in the long run if things are not done in a proper way.  The Gigafactory is poised to create 6,500 manufacturing jobs with better wages and benefits, which explains the current push for the project by the governors of the five states. Some excavation works have already begun in Reno, Nevada, although Tesla Motors Inc. (NASDAQ:TSLA) has reiterated that no final decision has been made.

The Gigafactory will be of great benefit to Tesla Motors Inc. (NASDAQ:TSLA) in its bid to considerably reduce battery costs of its upcoming electric vehicles. The giant electric company is looking for a site that will have a capacity of accommodating up to 10 million square feet of construction. Tesla is reportedly looking for a 500 – 1,000 acre site.

Tesla Motors Inc. (NASDAQ:TSLA) is reported to be looking for a state that will be willing to contribute 10% of the $5 billion costs, as well as offer other incentives. Financial capability in this case eliminates most of the states leaving California and Texas in the pole position as they have large tax bases and bigger state budgets. California might also be by-passed because of its stringent environmental laws as well as high tax levels.

California Budget Project executive director, Chris Hoene, was quoted as saying that California package for the project could reach highs of $500 million with a number of incentives, as well as local property tax credit and the streamlining of the California Environmental Quality Act.

Daniel Benton‘s Andor Capital Management owns 1.25 million shares with a reported value of $300.08 million of Tesla Motors Inc. (NASDAQ:TSLA).

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