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Tesla looking to double production of Model S by using California Tax Breaks


dsc01769The Elon Musk-led EV paragon, Tesla Motors, has plans to use a generous California tax break to ramp up production of the Model S electric sedans. With a cool $34.7 million going back into their pocket, Tesla wants to put this cash to use by more than doubling the rollout of their signature EV at the company’s Fremont factory.

Currently, the plant is churning out 21,000 cars per year, but with the tax break, their plans are to boost that number by 35,000 cars, marking one of the largest manufacturing ramp-ups since Tesla’s inception.

The state of California taxes those who buy manufacturing equipment, but exempts certain companies who are focused on bringing renewables to market, protecting the environments, and reducing carbon emissions. The $34.7 million break comes from sales and use taxes on $415 million worth of new manufacturing gear, and is likely to create 112 new jobs.

While some argue that subsidies, tax breaks, and other pro-growth mechanisms are a waste of tax payer money, this example shows exactly how effective they can be for industries attempting to evolve into something greater. Unlike farm subsidies and oil industry tax breaks, both of which have very little upside at this point, green energy tax breaks can lead to innovation, increased investment, and an overall stronger industry.

Renewables are not where they need to be in order to crowd out fossil fuels, so these tax breaks help bring economic parity, allowing young, growing companies to compete with huge institutions…and maybe, just maybe, change the world as we know it.

There is a huge amount of involved in giving such generous tax incentives to companies entering a hyper-competitive space, with several well publicized failures marring the perception of subsidies. But in such a young (and important) industry, this is how progress is made, rooting out the weak ideas and bringing the strong ones to the forefront, with a little help from Uncle Sam.

Tesla is an innovative startup that is spurring advancement in environmentally -friendly technologies, while still working to establish itself in the economy. This makes them the perfect candidate for tax breaks. Further, because of their willingness to capitalize on financial opportunities in order to grow and improve, they have the ability to move the entire industry forward at a much faster pace.

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