Tesla numbers still don’t add up for huge tax break

Apparently, what Tesla Motors lacks in profit, it makes up for in volume.

The company’s stock increased 10 percent Wednesday following a lackluster third quarter report. It sold fewer cars than anticipated this past quarter, but projects more this next quarter, so the price went up. Tesla logged a loss of 58 cents a share.

Investor’s must be like the Nevada Legislature. Never mind actual performance, it is the blue sky promises that count.

That’s why the governor and the Legislature cut a deal with Tesla for its new battery manufacturing facility to operate tax-free for a decade if it invests $3.5 billion. The deal eventually amounts to tax exemptions and credits totaling $1.3 billion. The state also agreed to spend $100 million to build a highway linking the site to U.S. Highway 50 in Lyon County. It has been estimated that the deal equals $385,000 per job.

A Seeking Alpha analyst reports that Tesla lost nearly $20,000 per vehicle in Q3, up from about $11,000 a car a year ago. The company’s negative free cash flow was $51,344 per car sold.

Tesla hopes its gigafactory will be able to cut the price of batteries for its cars from $500 per kWh to $250. The company’s Model S is equipped with an 85 kWh battery pack. That could save $21,000 and make the cars break even? That’s a business model to envy — break even.

A competitor intends to build batteries for $100 per kWh.

Tesla battery plant near Sparks (Reuters photo)

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8 comments on “Tesla numbers still don’t add up for huge tax break

  1. Rincon says:

    This is capitalism among state governments. They compete for big industry by offering them perks. Nevada simply miscalculated.

  2. Barbara says:

    Hardly capitalism. Capitalism is allowing the free market to determine winners and losers – not relying on government to hand out the goodies.

  3. Vernon Clayson says:

    Nevada simply miscalculaed??? I don’t know how the geniuses figured this pricey lemon would be successful, guess they don’t know those cars are beyond the reach of most of us. Seems to be happeing often, I can’t begin to understand whats happening with the wonderful health care plan, the state seems to be on both sides of that misery, and then there’s Harry Reid’s pet, Solyndra, that lasted only as long as the federal grant lasted. The Tesla factory, the next Goldfield of rusting hulks.

  4. It’s NOT free market capitalism…it’s crony capitalism. And it’s a perfect example of government distorting the free market. The role of government should be to provide a level playing field…period.

  5. Patrick says:

    The role of government, in a constitutional republic, is to do what the representatives of the people want them to do, within the restrictions imposed by the Constitution.

    I don’t recall anything in the Constitution which prohibits a company from lobbying on behalf of its interests and thereby affecting the policy of the republic, and if the members of the far right wing are to be believed, the 1st Amendment absolutely protects their “rights” to do so.

    Oh, and by the way HFB; there never has been “free market capitalism” in the sense that governments don’t affect commerce, and there never will be because people won’t tolerate it.

  6. Affecting commerce…and picking winners and losers are two different things. And I don’t remember the citizens of the Battle Born state being solicited as to whether they would want to lavish tax breaks for one company while sticking the screws to most of the others. And those representatives who initiate this should be pounding the pavement looking for a new job.

  7. Rincon says:

    Perhaps I should restate my point. This is an example of free competition, which is the basis for capitalism. Would you stifle the competition of the individual states? I like the idea of doing that, but it would be against the conservative principles of free competition, deregulation and as Patrick pointed out, freedom of speech. Don’t you guys want to be consistent? And if you are for stifling this kind of competition, what would your do about more subtle forms of competition, such as that which is seen in states that are unfriendly towards unions and workers’ rights? Those are probably far more potent than handouts to a few big companies.

    Vernon, I said they miscalculated; I didn’t suggest that they were smart.

  8. […] the fact that Hyperloop is being pushed by Elon Musk, whose Tesla Motors battery factory plan got $1.3 billion in tax credits and abatements from Nevada lawmakers and whose moribund SolarCity has been promised $1.2 million from the […]

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