Tesla’s Texas plant deal advances with county incentive approval

Texas is moving forward with efforts to woo Tesla Inc. and lure its next electric-vehicle factory after the county that’s home to the state capital signed off on a tax-relief package.

The Tesla logo is seen on a car in Los Angeles, California. (File photo for representational use) (REUTERS)
The Tesla logo is seen on a car in Los Angeles, California. (File photo for representational use)

Commissioners in Travis County voted Tuesday to approve a 70% property-tax rebate on the first $1.1 billion the company invests in a site near Austin. The abatement is worth at least $13.9 million.

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The areas of Austin and Tulsa, Oklahoma, are the finalists for landing the facility where Tesla plans to build the Cybertruck pickup that Chief Executive Officer Elon Musk first unveiled late last year. He has said on Twitter that the site also will supplement production of Model Y crossovers already being made at the company’s lone US car-assembly plant in Fremont, California.

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Tesla has told Travis County that its planned factory will eventually employ 5,000 full-time workers with an average salary of roughly $47,000 a year. At least half of those will be county residents.

The weeks-long effort to secure the abatement from the Austin area has played out as Musk, 49, has openly tweeted about the level of support the city of Tulsa and state of Oklahoma have offered. He visited the area on July 3, and Governor Kevin Stitt shared photos the next day of the small contingent who welcomed the billionaire to town.

Nate Jensen, a government professor at the University of Texas-Austin, said securing county-level abatements could be a step toward Tesla eventually accessing bigger forms of support from the state, including from Texas Enterprise Fund, one of the largest payers of economic-development incentives in the nation.

“They’ll promise the world to the county -- high environmental and wage standards, yearly audits -- and then as soon as they get other, larger incentives, they’ll back out of city incentives," Jensen said.

The other incentives the county is offering Tesla include a $46.4 million property-tax break from the local school district over ten years and an $80 million cap on the taxable value of the plant. If Tesla follows through with the project, it will be one of the largest economic-development agreements in Austin history.

Landing the factory would be a major boost to an area that saw its unemployment rate surge to 11.6% in May from 2.6% in February, with more than 81,000 losing their jobs in the midst of coronavirus-related shutdowns across the country. Half of those were earning less than $30,000 a year before being laid off from leisure and hospitality jobs, according to the Texas Workforce Commission.

Thousands of jobs would quickly open up for the start of construction, which Tesla wants to initiate this quarter.

The project hasn’t been unequivocally supported by all. Labor leaders and progressive groups urged the five-member board of commissioners to take their time and negotiate the best deal possible, calling for elected officials to ask for in-writing worker protections and a guarantee of a $15-an-hour wage for all employees.

First Published Date: 15 Jul 2020, 08:24 AM IST
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