Tesla Motors just snagged a hefty tax break in California. The state’s Alternative Energy and Advanced Transportation Financing Authority, part of the Treasurer’s office, yesterday approved a request from the startup to avoid paying sales tax on up to $320 million worth of manufacturing equipment — a deal expected to save Tesla $28.8 million, according to a staff report put together ahead of yesterday’s meeting.
Here’s how it works: Tesla will purchase machinery for four upcoming projects, spending $238 million between now and 2012 for Model S sedan production; $59 million for a powertrain components plant in Palo Alto, Calif.; and potentially $5 million for an expansion under consideration for the company’s Roadster assembly capacity (another $18 million is for “unbudgeted” equipment purchases).
But the title for that equipment will at first be held by the state financing authority, which doesn’t have to pay sales tax on equipment used to make zero-emission vehicles and other advanced transportation technologies. The state will then transfer the title back over to Tesla, which according to the staff report has now delivered “over 800 Roadsters,” just about a month after it announced delivery of its 700th Roadster at the Frankfurt Motor Show.
Tesla is riding quite the wave of government incentives for electric vehicles at this point, having secured a conditional loan commitment for $465 million from the Department of Energy this summer for the Model S sedan and powertrain projects, and been able to take take advantage of a loophole in Colorado this year that let a small number of Roadster buyers score a more than $42,000 tax credit on the luxury sports car. And the tax break announced yesterday comes by way of a program created in part to keep Tesla’s manufacturing based in California.
According to the staff report (you can download the full PDF here), Tesla has yet to finalize a site for its Model S production facility, but it is considering at least two sites in Long Beach and Downey, both in Southern California.
Photo courtesy of Tesla Motors