Tesla Motors Inc has created a game changing EV brand but there’s more to the firm than cars. Many people make the assumption that Tesla is just an automobile firm but it doesn’t always fit into that mold. The firm builds EVs, it has a division for energy storage, and it might start selling solar products soon. However, the business shrewdness that Elon Musk and the management team have shown consistently over the years make it hard to know what the company may do next.
Tesla is an automaker, no doubt. The proposed acquisition of SolarCity will also help the firm get a foothold in the energy industry. However, latest reports indicate that the firm is creating ways of making money from other industries. Interestingly, casinos are among the first set of firms willing to pay money to buy something other than cars from Elon Musk.
MGM Grand Casinos buy $20M worth of Gigafactory tax credits from Tesla
A set of documents that the Nevada Governor’s Office of Economic Development (GOED) revealed that Tesla Motors is now in the business of selling transferable tax credits. MGM Grand Casino is one of its first customers and it is on good authority that MGM paid for about $20 million in tax credits from Elon Musk’s firm. It is worthy of note that tax credits are rarely worth their face value because the government discounts them heavily.
Nonetheless, ThisisReno reports that “More than $9 million in TTCs earned by Tesla in 2015 was reported by the Las Vegas Review-Journal in December, but only after months of attempts to get unredacted public records from GOED did the state agency disclose where the tax credits went. Since that time, another $10.8 million in tax credits were transferred by Tesla to the MGM Grand, which used the credits for gaming license fees.”
More so, Steve Hill, GOED Executive Director has revealed that MGM paid Tesla about $20.4M for the tax credits. Nonetheless, Hill notes that “The benefit to the state comes from what Tesla is bringing, which is a lot of investment, a big boost in the economy and the jobs that they create. The ability for them to sell that tax credit to others is a neutral issue for the state. Most of the time, you don’t sell the (tax credits) for face value, but it’s close.”
The tax credits that Tesla sells shouldn’t raise eyebrows
Tesla Motors bears and critics of Elon Musk would be quick to spin the news about the sales of tax credits to epic proportions. They have accused Elon Musk of being a billionaire welfare king and they won’t hesitate to sound the alarms on the sales of tax credits. However, the fact remains that the money that Tesla stands to make from selling its Transferable tax credits is microscopic in relation to its investment in Nevada.
Musk is building a $5B Gigafactory in the Nevada desert – the factory will provide jobs and stimulate economic growth for the state. To support the goal, Nevada State gave the firm about $1.3B in tax incentives over a 20-year period. However, many critics usually choose to sidestep the fact that the tax credit seldom comes to Musk as checks. Rather, the tax credits mostly comes to the firm in the form of discounted electricity rates, transferable tax credits (TTC), and sales and property tax abatements.