Published on December 7th, 2018 |
by Steve Hanley
December 7th, 2018 by Steve Hanley
A new report from the Nevada Office of Economic Development is out and it gives Tesla high marks for exceeding almost every aspect of the agreement it made with the state in 2014. Back then, Nevada was part of the wreckage left behind by the global recession of 2008. Unemployment and foreclosures were high, wages low. If it wasn’t for the casinos in Las Vegas and Reno, Nevada was pretty much out of business.
Along came Tesla — a company most people had never heard of — with a proposal to build the biggest battery factory in the world. Those who had heard of Tesla were skeptical the upstart company from Silicon Valley would survive long enough to see the new factory finished. But Nevada listened to what Elon Musk and his lieutenants had to say and decided to offer Tesla a package of incentives worth $1.3 billion to build its dream in a moribund industrial park outside of Reno.
The deal was no taxpayer giveaway, though. Tesla had to meet certain performance guarantees along the way in order to qualify for the incentives. This latest report says the company has met or exceed virtually every one. According to the Las Vegas Review-Journal, Derek Armstrong, deputy director of the Governor’s Office of Economic Development, says, “The promises made have been promises kept. We’re extremely happy to see what they’ve done so far.”
They should be. The report says the state’s investment has “permanently changed the economic landscape of the area.” Not only has it been a catalyst for additional development — it has led to an increased demand for housing, retail, and other services by bringing in new workers. Other tech companies such as Switch, jet.com, and Blockchains decided to relocate in the area partly because of the “increased visibility that Tesla created, and the infrastructure investment the company has brought about,” according to the report.
“This really shows the economic diversification for Northern Nevada in that it’s moved from just being a service-based economy with a lot of reliance on the hotel and casino industry,” Armstrong said. “Now, we have an emerging advanced manufacturing component.”
The population in the local area increased by 25,500 people between 2014 and 2017. So far, 34,500 new jobs have been added to the local economy — 44% of them directly attributable to the Gigafactory. Tesla is expected to create an annual economic impact of $3.56 billion in the Washoe and Storey region in 2018.
Tesla promised to provide 6,500 jobs at the Gigafactory by the end of 2018. In fact, there were 7,059 employed there at the end of June. The average wage for the employees is $25.78 per hour, compared to the projected figure of $27.35. That is the only metric in the incentive agreement that Tesla has not exceeded. As of June, Tesla has brought in $6.05 billion in capital investment, surpassing the $4.95 billion projection.
“This is an example of how incentive programs have been put to work and work really well,” Armstrong says. He anticipates Tesla will continue to exceed expectations throughout the term of the incentive agreement. “We’re a third of the way through the process. What they’re doing now is just going to get greater later,” he says.
Recently, the Reno Gazette Journal was treated to a guided tour hosted by Chris Lister, vice president of operations of the Tesla Gigafactory. The journey included the battery cell production area and the assembly section for Model 3 powertrains. Check it out.
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