Tesla Motors to receive new sales tax incentives

21 Dec 2015


California state treasurer John Chiang announced Tuesday that electric car maker Tesla Motors would receive $39 million in sales tax incentives.

This comes as the latest round of subsidies for a company already flush with such incentives.

Tesla had earlier received $89 million in incentives from the programme for projects over the last six years. Space Exploration Technologies Corp, or SpaceX, also run by Tesla chief executive Elon Musk, was awarded an estimated $30.3 million from the initiative earlier this year.

Under the programme, qualified companies are excluded from paying sales tax on certain equipment purchases for up to three years. Musk's companies were the biggest beneficiaries of the programme, under which up to $100 million are awarded each year. Tesla applied for the most recent sales tax exclusion on the basis of over $463 million worth of expected purchases related to the expansion of its Model S and Model X.

According to Deana Carrillo, executive director of the economic development agency chaired by Chiang, the programme was designed to retain and expand the pool of high-paying jobs in advanced California industries.

However, she emphasised it was unlike controversial economic development programmes that lured companies with cash grants.

Meanwhile, Musk became the latest signatory of a letter sent to California emissions regulators that advised them to have Volkswagen make up for its emissions-cheating scandal by producing zero-emission cars in the future.

The letter, which was sent on Thursday, offered an alternative to making the German automaker fix the diesel cars that came with software that allowed them to emit less pollutants during emissions tests than they did on the road, according to Newsweek.

"A giant sum of money [will] be wasted in attempting to fix cars that cannot all be fixed, and where the fix may be worse than the problem if the cars are crushed well before the end of their useful lives," the letter reads.

"Instead, direct VW to accelerate greatly its rollout of zero-emission vehicles, which by their very nature, have zero emissions and thus present zero opportunities for cheating, and also do not require any enforcement dollars to verify."

The move comes a month after California Air Resources Board (CARB) ordered Volkswagen to recall all of its cars that came with the special software installed.

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