Tesla Gigafactory surpasses job creation, capital investment projections

Tesla gigafactory near Reno, Nevada, when it was still under construction. Source: Tesla

By Michelle Rindels

Four years after starting its battery-making Gigafactory in Northern Nevada, electric carmaker Tesla has exceeded the expectations lawmakers had when they unanimously approved a $1.3 billion incentive package for the company.

A new economic impact report being released Wednesday by the Governor’s Office of Economic Development (GOED) shows the company had 7,059 employees as of June 30, more than the 6,000 to 6,500 that legislators expected when they approved an incentive package in 2014. Those jobs involve an average of at least 30 hours a week, although not all of them are “qualified” jobs, meaning the workers have held them for at least three months.


“This is promises made, promises kept,” GOED Director Paul Anderson, who was a lawmaker at the time the incentive package was approved, said in an interview with The Nevada Independent. “These are just the hard numbers and hard facts.”

Average hourly wages at the factory are $25.78, which is above the current average wage in the state of $22.54. Tesla’s original projection was that it would create 6,500 jobs at an average wage of $27.35 an hour.

Wages paid out by the factory of about $379 million a year, about $9 million above where it projected it would be by now. The taxes Tesla employees are paying to state and local governments from their own purchases is estimated at $58 million a year.

The agreement required at least 50 percent of “qualified” employees are Nevada residents; Tesla has reported a 93 percent in-state residency rate for its qualified employees.

Construction has also fared better than predicted. An estimated 17,000 construction jobs were created from 2015 through 2018. The total economic impact of construction so far is estimated at $3.2 billion — well over the projection of $2.4 billion.

The deal was designed on the assumption that Tesla would invest $5 billion, but the report says the actual capital investment has been just over $6 billion so far. The project has a $3.56 billion economic impact in the Washoe and Storey county region annually, it says.

Report authors estimate that the Gigafactory is responsible for creating 15,300 jobs, counting direct jobs at the factory, those at vendors and “induced” jobs created by the consumer demands of the workers. An estimated 34,000 people — including families — rely on the wages from those jobs.

Nevada has abated $240.3 million in taxes for Tesla so far, including state and local property, sales and modified business taxes. The abatements will continue to mid-2024.

“This abatement represents a longer-term investment in a company that will fundamentally change the regional economy and will ultimately generate significant state and local tax revenues after 2024,” the report says. “It is important to emphasize that the incentives offered to Tesla were based on abatements or reimbursement of actual taxes paid by the company.”

The package also includes $195 million in transferrable tax credits, but those were not new — they were diverted from tax credit programs that were incenting film production in Nevada and trying to lure insurance companies to place their headquarters in the state. Tesla has claimed all but about $22 million of those credits.

“Although Tesla does not generate sales, property or MBT taxes in the short term, the project has resulted in significant new transportation and utility infrastructure, as well as employee spending that generates sales and property taxes at the full unabated rate,” report authors wrote. “Furthermore, investing in attracting this high-profile company to Northern Nevada has successfully seeded significant additional economic development activity locally and throughout the region.”

Nevada landed the Tesla Gigafactory amid intense competition from other states. At the time the package was approved, Gov. Brian Sandoval estimated it would inject $100 billion into the Nevada economy over 20 years.

Not a single lawmaker voted against the deal, although some detractors panned it at the time as a corporate giveaway on a shaky foundation and were critical that it temporarily gutted a film tax credit program.

Tesla founder Elon Musk has since acknowledged growing pains that have come with the Gigafactory, including a housing shortage and strain on the region’s infrastructure.

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