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Tesla Motors Inc (TSLA) Mimicking Factory Tourism Model of European Automakers

Tesla Inc (TSLA)

Tesla Motors Inc customers residing outside of California may be eligible for a tax break if they pick up their Tesla’s from the firm’s Fremont, California factory. A Bay Area lawmaker has proposed this in a bill. Senator Bob Wieckowski said the Senate Bill 680 will encourage tourism, and will be applicable to Tesla and other green-friendly vehicle makers, says a report from Mercury News.

Tesla Motors Inc (TSLA) Doesn't Need PR Firm or Ad Agency

Tesla mimicking European factory tourism model

Wieckowski said the EV firm approached him with the bill last year. Tesla intends mimicking the factory tourism models of European automakers such as Volvo and Mercedes Benz who offer museums visits, test drives, guided factory tours and gift shops to their customers. They are allowed to pick up their new vehicles and drive away through the cities and countryside.

The current law requires the out-of-state car buyers to pay sales tax to California on their purchase when they visit California for picking their car. It is likely that the buyers will receive a credit in their home state taxes, but the out-of-state buyers end up paying more taxes in California than they would at home since the tax rate in California is generally higher, the report says.

However, opponents say there is no need of any more breaks for the buyers of luxury car. Sen. Connie Leyva said the tax break will benefit only the high-income, out-of-state residents who are in no need of tax incentives. Though she is happy with the growth of this California electric-vehicle maker, she says she is not aware if anyone in her district even owns a Tesla.

Not all in favor of more tax breaks

There are a number of tax incentives already aimed at promoting the growth of Tesla Motors Inc and other firms connected with Tesla CEO – Elon Musk. A Senate committee analyzed the bill, and noted that at least two other tax breaks have already been given to Musk’s companies. These are an extended property tax exemption for solar-generation technology and a personal tax exemption for property used in space flight.

The state treasurer has also given sales tax exemptions to Tesla Motors Inc worth $128m for the purchase of equipment it needed for building its vehicles. This time though, the taxes will not be reduced for the EV firm, state officials estimate “it would provide a significant tax benefit for its potential customers, which could potentially increase sales for the firm.”

Another round of state tax breaks aimed at luxury electric-car buyers faced objections from senators Leyva and Mike Morrell, R-Rancho Cucamonga, who voted against the measure last month. Morrell supports sales tax cuts, but said the bill was faulty as it was primarily helping one company that has already received state subsidies, and is mostly limited to people with higher incomes.

At 10.20 am EDT today, Tesla shares were up 1.30% at $209.97. Year to date, the stock is down over 12% while in the last one-year, it is down almost 14%. The stock has a52-week high of $286.65 and a 52-week low of $141.05.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.