Nevada permits Tesla’s direct sales model and gives $1.3 billion tax breaks

Article by Andrew Christian, on September 15, 2014

The governor of Nevada -- Brian Sandoval – has inked tax breaks valued up to and a bill permitting Tesla Motors Inc. to bring its direct sales model in the state. The signing came after the state’s 42-member Assembly and 21-member Senate unanimously voted to write off Tesla’s sales taxes for 20 years and property and business taxes for 10 years – paving way to bring the carmaker’s battery “Gigafactory” in its territory.

The breaks were a major part of an agreement that the governor and Tesla chief executive recently disclosed. During a special session, legislators also passed bills exempting Tesla from a law that requires carmakers to use dealers when selling new cars as well as measures reducing tax breaks for filmmakers and insurance companies to do business in Nevada.

Tesla’s win in Nevada is contrast with its continued fight in other states which auto dealer associations oppose its direct sales model. Tesla’s storefront in Nevada has so far met no challenges either in court or in the state’s legislative department.

According to Wayne Frediani, executive director of the Nevada Franchised Auto Dealers Association, while dealers in the state initially opposed the direct-sales exemption for Tesla, they eventually gave their support it since association leaders felt it is their best interest to work with Sandoval in securing a significant economic development project for the state.

Frediani remarked that the exemption given to Tesla would likely have “very little impact” on the state’s dealers. Frediani remarked that the gigafactory project made the difference in dissolving the association’s opposition to Tesla’s direct sales model.

“Our entire state will benefit from it,” Frediani said. Tesla gigafactory is expected to create 6,500 direct jobs as well as thousands of indirect jobs. Frediano quipped that people working at the gigafactory would buy vehicles from dealers in the state, instead of buying a Tesla for themselves.

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