OPINION:
Occasionally, competition can be a bad thing. When California went against Nevada in an all-out battle to see which state could bestow the bigger subsidy on Tesla, the electric carmaker, Nevada taxpayers came out $1.3 billion the poorer.
That’s how much Nevada’s politicians are giving Tesla to build an electric-battery manufacturing plant, called the “gigafactory,” in Storey County. For the next decade or two, Tesla won’t pay a penny in sales, business or property taxes. If the politicians figure out another way Tesla can be taxed, the company has an extra $195 million in transferable credits to deal with it. Electricity comes steeply discounted, an important concession for a power-hungry battery factory. Nevada will even build a road connecting the factory to the main highway.
What politicians like Nevada Gov. Brian Sandoval, a Republican, left out of the announcement of the $1.3 billion gift basket for Tesla is how much money the state’s other companies must pay in extra taxes to make up the difference. Thousands of Nevada business owners should be asking why only Tesla gets such breaks.
The answer is simple: Tesla is “cool,” and they’re not. The company produces beautiful cars, many costing more than $100,000. (That’s after billions spent in federal and state tax discounts.) Hollywood celebrities prefer the Tesla because the life of luxury and excess that they lead — and the enormous carbon footprint — is forgotten when they roll up to the red carpet on battery power. Who needs carbon credits?
Politicians love being seen with who’s and what’s trendy, and with unlimited access to other people’s money, they’ll spend whatever it takes to make Tesla a success, at least in the short term. The government has a poor record of picking winners in the marketplace.
The Energy Department handed upstart firm A123 Systems a check for $249 million and told it to build an electric-car battery factory. The company took the money and promptly went bankrupt. A $119 million grant went to Ener1 for the same purpose and with the same result: bankruptcy. Fisker Automotive went belly up after it got a half-billion dollars from the government.
It will always be this way, because electric cars are a luxury for the rich, not a sensible choice for average Americans. Electric cars have a limited range, and the owner can’t “top off” the electric tank at the neighborhood gasoline station, one of 121,000 in the nation. There are only 8,500 public charging stations and perhaps 20,000 including private plug-in places.
Filling a gasoline tank requires only a few minutes, but it can take up to eight hours to get an electric car back on the road fully charged. Take a good book.
Government should stop subsidizing celebrities and their toys and quit showering gifts on one company to the neglect of the rest. If Tesla needs a tax break, so do the rest of Nevada’s 47,000 businesses.
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