Tesla Motors, Inc. TSLA is set to receive $39 million in sales tax incentives from California, per media reports. These incentives are a part of the state’s program, which forgoes sales and uses taxes on certain equipment purchases by qualified companies for up to three years.
The program mainly focuses on companies involved in advanced manufacturing or alternative energy and offers up to $100 million every year. It aims at increasing the number of high paying jobs in advanced industries in California.
The current $39 million incentive to Tesla is reportedly being given for expected purchases of equipment worth $463 million. The electric carmaker is used to getting attractive incentives from various states. Over the last six years, Tesla has received incentives of over $89 million from California under this program.
Last year, Nevada’s Legislature also approved a package of bills, which will allow tax incentives of $1.3 billion spread over 20 years for the construction of Tesla’s $5 billion Gigafactory in the state. The tax benefits include sales tax exemptions of around $725 million through Jun 2034. Moreover, Tesla will save payroll and other taxes worth about $300 million through 2024. It is estimated that the Gigafactory will create 3,000 construction jobs and 16,000 indirect jobs in the state apart from the 6,500 direct positions promised earlier by the company.
Tesla currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include General Motors Co. GM, O'Reilly Automotive Inc. ORLY and U.S. Auto Parts Network, Inc. PRTS. All these stocks currently carry a Zacks Rank #2 (Buy).
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