Charity? Yes, but charity for whom?

Ain’t charity grand? Even if it ain’t charity?

Some of the news accounts that heralded the announcement by Telsa Motors that it was giving $1.5 million to Nevada K-12 education as the first installment in a $37.5 million donation did get around to mentioning toward the end that the handout was part of a “commitment” the company made when it accepted $1.3 billion in tax breaks for building its electric care battery factory near Sparks in 2014.

All of the handouts were specifically targeted to items such as robotics and battery programs that might benefit the company.

The Las Vegas newspaper wrote that Gov. Brian “Sandoval said in a statement he was grateful for Tesla’s commitment and the opportunities it would provide.”


As one of the paper’s columnists got around to pointing out, the handout was required in the original deal. “Tesla will make direct contributions to K-12 education of $37.5 million beginning August 2018; grant $1 million to fund advanced battery research at UNLV; prioritize the employment of Nevadans and Veterans,” the deal states.

For that paltry sum and few other “commitments” the company got:

Columnist Victor Joecks noted:

Normally a company giving away millions of dollars for educational programs would be worth celebrating. But this wasn’t an act of corporate generosity. In 2014, the state provided Tesla with $1.3 billion in tax credits and abatements. As part of its pitch, the company promised to give $37.5 million to fund education programs.

Let’s save our praise for those doing philanthropy, not for a company using charity as political cover for a massive handout.

According to projections made in 2014, the gigafactory was to have 6,500 employees by now, but as of the end of 2017 it had only 1,400 employees.

According to the Nevada Appeal, Tesla qualified for $36.85 million in transferable tax credits, plus $115 million in tax abatements during the 2017 fiscal year alone.

Ain’t charity grand?

By the bye, Tesla’s CEO Elon Musk is worth $20 billion.

Tesla gigafactory tour in 2016. (AP pix via R-J)



Tesla keeps raking in tax credits though its jobs and capital investments are falling short of projections

Inside Tesla gigafactory.

Inside Tesla gigafactory.

Nevada keeps handing out money to Tesla Motors even though it is not coming close to living up to projections made when the Legislature in 2014 agreed to $1.3 billion in tax breaks and credits in return for the company building a $5 billion, 10 million-square-foot factory battery factory near Sparks.

This week the Governor’s Office of Economic Development agreed to provide Tesla with $8 million in transferable tax credits, bringing the firm’s tax credits to more than $35 million so far, even though the company has created only 331 jobs so far, well under the projected 1,700 jobs, according to a 2014 analysis of the project by Applied Economics.

The factory’s capital investment is also falling short — with only $600 million invested so far, compared to a projected $2 billion.

Since the company has almost no tax liability in Nevada the tax credits can to sold, presumably at a discount, to companies who owe taxes. Previously, Tesla has sold $20 million in tax credits to MGM. The certificate for the $8 million specifies it is to be applied to gaming licensing fees.

The projections provided lawmakers in 2014 forecast the plant would have 4,700 workers in 2017 and 6,500 in 2018. It also estimated an economic impact of over $100 billion over the next 20 years.



Tesla finding empty boxes under its Christmas tree?

The writers at Seeking Alpha keep plucking ornaments off Elon Musk’s Christmas tree and smashing them.

John Peterson reports that the gigafactory near Sparks that is to produce lithium-ion batteries for Musk’s Tesla Model 3 electric car so it can carry a price tag of $35,000 is barely a shadow of the vision painted in smoke back in 2014 when the Nevada governor and Legislature swooned and handed out $1.3 billion in tax breaks and credits to Tesla for locating that factory in Nevada. (As reported by the Nevada Policy Research Institute and others, Tesla recently sold $20 million in tax credits, presumably at a discount, to megacasino company MGM, which will now pay $20 million less in gaming, sales and other taxes.)

“Unfortunately, the facility that’s taking form in the desert only has two manufacturing competencies (instead of the promised seven) and is a sickly shadow of the Gigavision that can’t deliver the promised savings,” writes Peterson, who predicts the gigafactory’s batteries will not be  cheap and the Model 3 will not have a $35,000 price tag.

Peterson said he sees nothing in Tesla’s SEC filings, press releases or conference calls indicating experienced industry partners are willing to fill the gap in those manufacturing competencies. “Without suitable industry partners the Gigavision will remain a Gigafarce,” he snipes.

Montana Skeptic also seems to think Musk has been more naughty than nice, noting that in the third quarter Musk used referrals, price-cutting, email solicitations, inflated values on trade-ins and two-year leasing deals to achieve his promised number of vehicle deliveries. But in the fourth quarter Tesla won’t have $140 million in regulatory credits to cover losses and now has SolarCity hanging around its neck.

Meanwhile, Anton Wahlman points out that “Tenneco’s chief technologist claims that new automobile emissions control technologies are reaching a dramatically efficient stage for regular gasoline/diesel cars. So efficient, in fact — he claims — that what comes out the tailpipe of the new car/truck is cleaner than what enters it through the air filter.”

So, who needs a zero emission electric car — or coal-powered car as skeptics like to call it — when gasoline and diesel cars and trucks can actually clean the air while operating?

Merry Christmas, Mr. Musk, and you too, Gov. Sandoval.

Tesla Model 3

Tesla Model 3


Electric car company should change its name to Mañana

Faraday Future site (AP photo by John Locher via Business Insider)

Faraday Future site (AP photo by John Locher via Business Insider)

Maybe there is a reason the company is called Faraday Future. Could it be because everything is in the future?

The company’s contractor now says it has “adjusted” its construction schedule at its proposed future electric car manufacturing plant at Apex in North Las Vegas. That’s another word for halted. The contractor says work is to resume next year.

Faraday has failed to reply to emailed questions from the Las Vegas newspaper, but Business Insider reports that a Faraday Future representative said late Monday that the company is “refocusing efforts” on its upcoming production vehicle in the meantime.

Based on Faraday’s pie-in-the-sky promises in 2015, at the urging of Gov. Brian Sandoval, the state Legislature meeting urgently in special session agreed to dole out $215 million in tax abatements and credits to entice Faraday Future to build in Nevada. The state also promised $120 million in infrastructure that includes water, rail and road improvements that may include widening I-15 and improving the freeway interchange near the Apex industrial park.

The governor told the Las Vegas newspaper the state will be out no money if Faraday fails to perform in the future.

But state Treasurer Dan Schwartz, who visited China recently, has been warning for some time that the company may be a sham. He told the local paper a few days ago, “We’re increasingly more concerned than we were before that this is just a big Ponzi scheme.”

The LA Times reported two weeks ago that Faraday Future hasn’t been paying its bills and still owes on a $75 million performance bond to the state of Nevada. It has fallen $57 million behind in payments due to an escrow account for its contractors.

Speaking of special sessions to dole out money, Tesla Motors continues to build on its electric car battery plant near Sparks but appears to be still lagging behind its promised schedule when lawmakers in 2014 approved $1.3 billion in tax exemptions and agreed to spend $100 million to build a highway to the plant.

And the governor said Monday he wants to hold off on going forward with fast-tracking $899 million in road work to handle traffic for a new $1.9 billion, 65,000-seat stadium in Las Vegas that is being funded with $750 million in hotel room tax funds.

NFL owners could vote in January to move the Oakland Raiders to Las Vegas — or not.


Maybe he heard about casino and newspaper owner Sheldon Adelson threatening to walk away from the deal if the Raiders don’t meet his terms.

Faraday Future released a promotional video with remarkably little real information:

Can’t hear any construction work?


How is that first special session gift — the one for Tesla — turning out?

Tesla gigafactory (R-J photo)

Tesla gigafactory (R-J photo)

There have been three special legislative sessions in three years in Nevada specifically to dole out generous gifts to billionaires based on base assumptions that those gifts might someday prove beneficial to the economy of the state and generate more tax revenue than the handout.

You know the gifts — tax breaks and abatements and roadwork and land for a Tesla Motors battery factory near Sparks, tax breaks and infrastructure for a planned electric car plant for Faraday Future in Clark County and now $750 million in tax money to build a football stadium for casino and newspaper owner Sheldon Adelson and the NFL Raiders.

So, how’s that first handout working out?

Montana Skeptic at Seeking Alpha reports that Nevada is getting the shaft.

As of the latest report in late August, even with generous amortization allowances, the 272 jobs created by the so called gigafactory have cost Nevada $179,000 each.

Tesla has said the $5 billion, 10 million-square-foot factory eventually will employ 6,500 workers and add $100 billion to the state economy over the next 20 years.

There were supposed to be 700 full-time jobs in 2015 instead of 272 and 1,700 this year instead of only 419 so far. For 2017 the prediction is 4,700 jobs, reaching that pie in the sky 6,500 in 2018.

Capital expenditures by Tesla also have fallen well short of projections.

The plant is supposed to be 10 million square feet in size, but now is less than 2 million.

Editorial: Bets placed on Tesla, Faraday looking like long shots

Rendering of Faraday Future plant at Apex.

There was an interesting quote in the Las Vegas newspaper recently from Steve Hill, executive director of the Governor’s Office of Economic Development (GOED), the office that gives your money to others in hopes that they will create jobs, improve the economy and generate more tax revenues. Sounds a bit like playing roulette.

“Trying to predict whether a company is going to succeed or flourish, or even say what they’re going to do is … you’re going to be wrong at times, maybe as often as you’re right,” Hill was quoted as saying.

Or perhaps you’re going to be wrong every time?

Treasurer Dan Schwartz

Hill’s comment came in response to concerns raised by Nevada Treasurer Dan Schwartz about the ability of Chinese-backed company Faraday Future to actually finance a proposed $1 billion electric car factory in North Las Vegas.

In a special session lawmakers agreed — at the urging of Gov. Brian Sandoval — to dole out $215 million in tax abatements and credits to entice the company to build its factory in Nevada, though at the time it did not even have a prototype vehicle. The state also promised $120 million in infrastructure that includes water, rail and road improvements that may include widening I-15 and improving the freeway interchange near the Apex industrial park.

Schwartz, who had just returned from a trip to China, told the Los Angeles Business Journal that he had doubts about whether Faraday Future’s billionaire backer, Jia Yueting, could raise the money needed. Schwartz said the state is asking the company to put up $70 million to ensure Nevada’s infrastructure investment.

“I spoke with several members of the Chinese corporate and financial communities who are familiar with and know Leshi (Jia’s Chinese company) and Mr. Jia,” Schwartz told the Journal. “What they all agreed on is he doesn’t have the money. … If you look at the financials, (Jia) isn’t making any money. He certainly isn’t making any money to fund a billion-dollar car facility.”

Hill told the Journal Nevada taxpayers should be protected so long as Faraday puts up the $70 million to secure the state’s general obligation bonds to pay for infrastructure.

The Faraday deal was a replay for the special session in which lawmakers agreed with Sandoval’s plan to provide $1.3 billion in tax exemptions and credits to Tesla Motors if it invests $3.5 billion in a new battery factory east of Sparks. The state also agreed to spend $100 million to build a highway linking the site to U.S. Highway 50 in Lyon County.

So far Tesla is coming up short on its projections.

Tesla planned to have the first two phases of construction complete by the end of 2015 and have a third phase underway. Only one phase is complete. It had projected spending $1 billion by now but has spent only $400 million. It also said it would employ 700 workers by the end of 2015 and hire another 1,000 in 2016. Only 300 are employed.

Hill has been quoted in the press as saying the risk for taxpayers is minimal, though he admitted the state could have to pay for the promised Tesla infrastructure improvements.

Tesla has until 2024, to invest its promised $3.5 billion. The company is still losing money on every electric car it sells.

As if those gambles were not risky enough, just this past week the GOED doled out another $400,000 to rooftop solar panel installer SolarCity, even though the company nearly two months ago laid off 550 workers and stopped installation work in Nevada because the Public Utilities Commission changed the rate structure for solar customers, making such installations financially unfeasible.

This brings to $800,000 the amount of tax money handed to the company out of a promised $1.2 million. The company’s stock has fallen from more than $60 a share to less than $20. Both Tesla and SolarCity are helmed by billionaire Elon Musk.

Whenever lawmakers and the governor gamble with our tax money, we are the ones left holding the marker. Perhaps, they should just bet on black. The odds might be better.

A version of this editorial appeared this past week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel,  Sparks Tribune and the Lincoln County Record. It ran as a column in the Elko Daily Free Press.

Newspaper column: Governor offers a way to save sage grouse and mining

Gov. Brian Sandoval is imploring the Interior Department to accept a state-created alternative to its proposed draconian plan to remove millions of acres of federal public land from productive use — specifically mining — as a way of paying lip service to saving greater sage grouse habitat.

In September the federal agency declined to list the bird under the Endangered Species Act and instead issued land use plans that bar mineral exploration and development on nearly 3 million acres within Nevada and restricts grazing and public access on a total of 16 million acres in the state.

Greater sage grouse (Rawlins Daily Times via AP)

On Jan. 15, Sandoval sent a letter to Neil Kornze, director of the Bureau of Land Management, which is a division of Interior and the agency overseeing the bulk of federal public lands in the state, asking him to accept a state proposal that would essentially swap parcels of land to be protected. Instead of restricting mining on 555,000 acres as the federal land use plan outlines, the state plan would restrict mining on 394,000 acres, but the swap would protect an additional 44 active sage grouse leks, as breeding grounds are called. The swap also could free up as many as 3,700 existing mining claims.

The governor warned in a press release this past week that failure to negotiate in good faith would result in his administration pursuing legal options.

Such a legal option is already being pursued, though the governor has insisted it is premature. The state, nine counties, three mining companies and a ranch have filed suit in federal court to block the land use plan.

A Reno federal judge refused to grant an injunction but a trail could take place this summer.

In his letter, Sandoval argues that the grouse protection restrictions would have serious economic impact on the Nevada economy and jobs.

A single lithium mining project in Humboldt County is estimated to have a direct economic impact of $2.5 billion over the life of the project and indirect impact of $3.4 billion, while creating 9,000 person-years of employment and half a billion dollars in salaries. State and local tax revenues are expected to exceed $100 million.

Lithium is used to make lithium-ion batteries used in electric and hybrid cars. The Tesla Motors/Panasonic battery manufacturing plant near Sparks is expected to consume a huge amount of lithium.

“I believe the proposed land withdrawal will not be able to show any measurable results except for the demise of the mineral exploration industry in Nevada,” Sandoval pointedly states. “The urgency to implement the withdrawal proposal prior to conducting the proper analysis needed to evaluate the efficacy of the action and socio-economic impact of the action is unclear,” adding that the agencies involved have “provided no science or analysis at any level to support the rationale” for excluding mining operations.

As for the threats to sage grouse habitat, Sandoval notes, as he has repeatedly in the past, that wild horse overpopulation, invasive species and huge wildfires that consume hundreds of thousands of acres at a time pose a far more significant danger to the grouse than mining, but little, if anything, is being done about those threats.

Additionally, there is relatively little reliable information on just how threatened the grouse population really is. Sandoval’s letter notes one major grouse habitat region nearly doubled in population during a recent three-year period.

Though Interior Secretary Sally Jewell stated that valid existing mining claims are exempt from any withdrawals, the governor points out that the definition of such valid claims cannot be found in the Federal Register. There is a question as to whether unpatented mining claims — on which millions of dollars in annual fees have been paid but the claims are not yet worked — will be classified as valid existing claims. Sandoval said this needs to be clarified.

In a press release this past week, Sandoval described his proposal as a win-win. “The proposal detailed in the state’s response delivers a ‘win-win’ solution in an effort to achieve the mutual goals of preserving our thriving mining industry, protecting the sage-grouse and enhancing its habitat and maintaining our state’s vast potential for future economic development opportunities. With the correct plan and management Nevada’s mining industry, the sage-grouse, and future economic development can all coexist and flourish in the Silver State,” he wrote.

BLM Nevada spokesman Stephen Clutter told The Associated Press, “We will certainly give serious consideration to these ideas as well as the other scoping comments we have received.”

That would be a change from past behavior.

A version of this column appears this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel, the Lincoln County Record and the Sparks Tribune — and the Elko Daily Free Press.

Crony socialism is now all right with them

Methinks the editorial position of the Las Vegas newspaper bent to the left this morning.

Under the headline, “State stepping up for autonomous cars,” the editorial in this morning’s Review-Journal applauded Republican Gov. Brian Sandoval for deciding to appoint an autonomous car expert to the Governor’s Office of Economic Development (GOED) — “a person whose job it will be to meet with companies looking to develop the industry and convince them Nevada is the place to do it.”

The editorial went on to applaud the governor for shelling out tax money and/or tax credits and abatements to attract companies such as Apple Computer, Switch, Tesla and Faraday Future, all described as big players in the information and energy economy.

“Gov. Sandoval’s competitive streak — and his vision for economic development — is but one reason Nevada has an advantage over other states when it comes to the new industry of driverless cars,” the editorial gushes with enthusiasm and calls for more of the same. “The state’s higher education system needs to match that vision with a competitive job-training program of its own, tailored specifically to the needs of the companies that will set up shop here.”

It seems like only yesterday, well, two years ago, the same editorial page was bemoaning such largesse under the headline, “Subsidized jobs,” noting that some of the deals GOED was cutting amounted to between $5,000 and $55,000 per job.

That editorial ended thusly:

Even at the levels handed out last month, the public simply can’t afford to subsidize its way to full employment. And it’s absolutely brutal to ask local businesses, who have invested in this community and sacrificed to keep their doors open, to pay full freight for themselves so newcomers — and potential competitors — can enter the market at a discount.

Nevada needs jobs, and the Barclaycard US and CITRA plans will help. But having Nevada governments pick winners isn’t a long-term employment solution. Our officials should be just as focused on doing whatever it takes to ensure existing companies can stay in business and grow. Let’s find a way to give them a break.

If a Republican governor and a Republican majority Legislature — meeting twice in special sessions — can embrace such crony socialism, so can a once-staunchly libertarian editorial page.

Evolution rewards the survival of the fittest.

Then there is the survival of those who just fit in.

Photo of Gov. Brian Sandoval accompanying the online version of today’s Review-Journal editorial. (R-J photo)


Tesla testing waters for obtaining lithium from inside Nevada

The Clayton Valley is a lithium-rich area in Nevada that is being developed by Pure Energy Minerals. (Photo courtesy of Pure Energy Minerals via Forbes)

Earlier, Tesla Motors announced that it was contracting with producers in Mexico to obtain lithium for its gigafactory battery plant near Sparks, but this week Pure Energy Minerals Limited announced it has an agreement with Tesla to potentially supply the lithium hydroxide for Tesla’s lithium ion batteries.

In a press release, Pure Energy said it will conduct a feasibility study at its project near Silver Peak in Esmeralda County west of Goldfield, about 200 miles from the gigafactory.

“The Agreement sets a predetermined price that is below current market rates and is aligned with Tesla’s goal to continuously reduce the cost of its lithium ion batteries. It is proposed that the Product will be used in the battery cell manufacturing process of Tesla’s rapidly growing electric vehicle and stationary storage business units, which are located approximately 3.5 hrs. drive from the Project,” the press release says.

The lithium is in underground salty aquifers across an 8,000-acre area, according to Forbes. “To extract the lithium, Pure Energy Minerals plans to drill holes in the ground, pump the water to the surface, and extract the lithium from the brine,” the article says.

No mention is made of the number of jobs is might create, but some environmentalists are sure to protest something about the project — the water drawdown, the leftover salt, impact on sidewinder habitat, something.

Robert Mintak, Pure Energy CEO, commented, “This agreement with Tesla is a significant milestone that validates Pure Energy’s lithium brine project and business development model, and is an important step in the development of the Project. Pure Energy is aligned with both Tesla’s and the State of Nevada’s development objectives, and we hope to positively contribute to Nevada’s booming clean energy based economy.”



State’s shining deal with Tesla showing tarnish?

Writers at the Seeking Alpha website are taking a more jaundiced view of the much vaunted Tesla Motors and plans for a gigafactory near Sparks that was given $1.3 billion in tax breaks by the state.

Paulo Santos opines that the gigafactory will be much smaller than the announced 10 million square feet, perhaps 80 percent smaller. He quotes Tesla head honcho Elon Musk as saying,” But what we have found is, with the Gigafactory, that as we spent more and more time on it, we found we’ve been able to improve the space efficiency of the production and the overall efficiency by more than our initial expectations. So the net result is that we think in the same volume we can do potentially significantly more output.” (Santos’ bold-face.)

Santos also notes that a union told its members in March the project was being cut by 80 percent.

Long/Short Trader has a headline that reads: “The Tesla Bubble is Bursting.”

It notes there are problems with the production of the first orders of the Model X, as well as “exaggerated promises, and profligate spending.”

The writer notes that Tesla has lowered its estimate for the number of cars it will ship for the year from 55,000 to between 50,000 and 55,000. “All of this should come as no surprise to Tesla watchers. Musk tends to promise more than he can deliver and then attempts to make up for shortcoming later on,” the article notes.

Then there is the problem of lower oil prices, as well the fact earnings per share continue to decline and remain negative.

When Musk’s SolarCity was awarded $1.2 million in taxpayer handouts to open an office in Nevada for rooftop solar installations, then-Secretary of State Ross Miller fawned, “You had me at Elon Musk,” while voting to award the handout.

Tesla gigafactory