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Opinion

Mitchell: Tesla numbers still don’t add up for huge tax break

Mitchell: Tesla numbers still don’t add up for huge tax break
Chuck Muth
November 5, 2015
Tesla battery plant near Sparks (Photo by James Glover II, Reuters)

Tesla battery plant near Sparks (Photo by James Glover II, Reuters)

Thomas(Thomas Mitchell) – Apparently, what Tesla Motors lacks in profit, it makes up for in volume.

The company’s stock increased 10 percent Wednesday following a lackluster third quarter report. It sold fewer cars than anticipated this past quarter, but projects more this next quarter, so the price went up. Tesla logged a loss of 58 cents a share.

Investor’s must be like the Nevada Legislature. Never mind actual performance, it is the blue sky promises that count.

That’s why the governor and the Legislature cut a deal with Tesla for its new battery manufacturing facility to operate tax-free for a decade if it invests $3.5 billion. The deal eventually amounts to tax exemptions and credits totaling $1.3 billion. The state also agreed to spend $100 million to build a highway linking the site to U.S. Highway 50 in Lyon County. It has been estimated that the deal equals $385,000 per job.

A Seeking Alpha analyst reports that Tesla lost nearly $20,000 per vehicle in Q3, up from about $11,000 a car a year ago. The company’s negative free cash flow was $51,344 per car sold.

Tesla hopes its gigafactory will be able to cut the price of batteries for its cars from $500 per kWh to $250. The company’s Model S is equipped with an 85 kWh battery pack. That could save $21,000 and make the cars break even? That’s a business model to envy — break even.

A competitor intends to build batteries for $100 per kWh.

 

Mr. Mitchell publishes the 4TH ST8 Blog at www.4thst8.wordpress.com.

The column was originally published at Mr. Mitchell’s blog.

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Related ItemsTaxTesla Gigafactory
Opinion
November 5, 2015
Chuck Muth

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