Austin Texas Approves Tax Breaks for Tesla’s Cybertruck

Austin Texas officials have approved a total of at least $60 million in property tax rebates. This is in an effort to bring Tesla’s next electric car factory to the Texan city.

Austin is one of the two leading candidates for the Tesla factory. It is where the company will build the Cybertruck, as well as in Tulsa, Oklahoma.

The policy-making and administrative arm of the local government, Travis County Commissioner’s Court, approved an agreement. It will save Tesla around $14 million in property taxes over the next 10 years.

The Del Valle school district, near where the factory would be located, approved an agreement. This would grant Tesla close to $50 million in tax rebates over the same time frame.

The vote was preceded by some drama. It was over whether Tesla could wait any longer for an answer on the incentive package.

Citizens who called in at Tuesday’s Travis County meeting stressed that they believe time is of the essence. Especially after Musk visited Tulsa, Oklahoma on July 3rd. Reports detailed the state’s behind-the-scenes efforts to offer its own incentive package.

One resident said they’d have to vote today. Time kills deals. The longer this drags on, the bigger the chance that another state will put together a package that could sway Tesla.

Another said it’s very important, in their opinion, that they get this done quickly. They added that delay tactics tend to scare them. 

The Tesla Factory and Employment in Austin Texas

CEO Elon Musk said that tax incentives will play a role in where the factory will land. But he’s also considering logistics costs, access to a large workforce with a wide range of talents, and quality of life.

At the factory, the company will build its Cybertruck and the Model Y SUVs destined for the East Coast.

It has zeroed in on a 2,100-acre site near the Austin-Bergstrom International Airport. The company has the option to buy the land for $5 million.

It would spend $1.1 billion, building a 4 to 5 million square foot factory that would employ around 5,000 workers. This is according to documents submitted to Travis County last month.

It would pay those workers an average salary of about $47,000, with benefits and stock options. The minimum pay would start at $15 per hour and it would not employ a unionized workforce.

These figures have been a sticking point for many citizens, local union representatives, and worker’s rights advocates during public meetings.

The Travis County commissioners revealed two concessions in response. Firstly, Tesla has agreed to escalate the $15 per hour minimum wage annually with the Consumer Price Index. Specifically the trailing 10-year compound annual growth rate.

Secondly, food and janitorial service workers at the factory will also be paid at least $15 per hour.

Taxes

Even with tax breaks, Austin Texas stands to benefit from the property tax that Tesla would bring with the factory. Much of the proposed site is largely unoccupied. 

Travis County currently only receives about $6,400 per year. That is from a sand and gravel mining company that operates on the property. 

But Tesla would pay closer to $880,000 per year, or $8.8 million over the first 10 years. This is as long as it keeps up with the investment and hiring milestones required by the contract.

The company has also agreed to put 10 percent of the county’s tax rebate back into the local community.

The Del Valle school district approved an agreement last Thursday. This agreement would allow Tesla to pay property tax on just 20 percent of the factory’s assessed value. 

It will save the company about $50 million, and was passed in a 7 to 1 vote.