Wednesday, December 16, 2015

Tesla: New $39 Million Benefit from California Sales Tax Exclusion

Tesla Motors is the latest company to benefit from a California program to allow renewable energy manufacturers to avoid paying sales tax on manufacturing equipment.  On Tuesday, December 16, the California Alternative Energy and Advanced Transportation Authority (CAEATFA) granted the benefit under their sales tax exclusion program for alternative energy, advanced transportation and advanced manufacturing facilities.

Tesla expects to purchase up to $463 million to expand manufacturing and related facilities in four California locations (Fremont, Hawthorne, Palo Alto and Lathrop).  The company will avoid paying about $39 million in sales taxes on the planned equipment purchases.

Tesla charging in Maastricht, Nethlerlands October, 2015
The funds will be used to ramp up manufacturing capacity from 77,000 to 195,000 Model S and Model X vehicles per year. According to CAETFA, Tesla is planning to use the new equipment to expand its body shop, stamping line, vehicle assembly, plastics shop, production control, tooling and prototyping.  As as result of the expanded manufacturing, 1,384 new jobs are expected to be created.

With the benefit approved this week, Tesla has received over $120 million in sales tax exclusions for manufacturing equipment under the CAEATFA program.  Many other companies, ranging from anaerobic digestion to landfill gas to photovoltaic manufacturing and others have successfully utilized the program (details on the program here).  CAEATFA is one of the financing authorities chaired by State Treasurer John Chiang.

Tesla expects to purchase equipment and tooling for components ranging from body tooling to plastics to paint.  Below is the anticipated cost of the various types of equipment.

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