How Tesla bilks taxpayers
Over the last 12 years, Elon Musk and Tesla have secured hundreds of millions of taxpayer dollars to help grow their business, while making numerous commitments to state and local governments that often failed to materialize.
In several cases, Tesla has created a small fraction of the jobs it promised to create, despite massive public investments.
In New York, Tesla has received nearly $1 billion from the state to build a solar panel manufacturing facility that has failed to generate the number and quality of jobs the company had promised. In 2014, Musk’s firm SolarCity, which was acquired by Tesla two years later, broke ground on a massive one-gigawatt solar module factory at a former steel plant in Buffalo. The solar plant, called Riverbend, was expected to produce 10,000 solar panels per day, creating 3,000 direct jobs (including 1,460 manufacturing jobs) and 1,400 indirect jobs.
New York agreed to provide $750 million for the project while SolarCity planned to invest $5 billion. The state reportedly evicted the then-tenant at the site so that the project could proceed.
Production at Riverbend was scheduled to begin in early 2016, but delays pushed construction back. In an October 2015 filing with the Securities and Exchange Commission, SolarCity quietly reduced the anticipated number of manufacturing jobs at the plant from 1,460 to 500 — the rest were to be created elsewhere in the state.
Tesla acquired SolarCity in 2016, and in April 2017, then-New York Governor Andrew Cuomo approved additional funding for the plant, increasing the state’s total investment in Riverbend to $959 million. Tesla began production at Riverbend in August 2017, with Musk claiming that the plant would produce enough solar shingles to cover 1,000 roofs per week by 2020. Tesla claimed in a March 2020 tweet that it had met that goal.
But despite its production rate, the company has struggled to find a steady market to sell its solar roof tiles. A 2023 report by Wood Mackenzie estimated that by 2022, Tesla was averaging just 21 solar roof installations per week.
The company does not even use its solar panels to supply its own power. Instead, the Riverbend plant used solar panels made by LONGi Green Energy Technology, a China-based competitor.
Tesla’s New York plant has also failed to meet economic development expectations due to its floundering solar business. Most of the plant’s employees are reportedly low-level data analysts working on other Tesla projects, rather than in manufacturing jobs the company predicted it would create.
In 2023, the Wall Street Journal reported that the state of New York had amended the terms of its subsidy with Tesla a dozen times, scaling down the number of manufacturing jobs required at the plant and extending deadlines.
The problems with the project have led policy analysts and politicians to criticize its significant state subsidies.
“In building and equipping the Tesla solar-panel plant, the state became a direct investor in that project under the worst possible terms,” E.J. McMahon, founding senior fellow of the conservative Empire Center for Public Policy, said in 2023. “In terms of sheer direct cost to taxpayers, this may rank as the single biggest economic development boondoggle in American history.”
In April of this year, New York lawmakers called for Tesla to face penalties after the company’s filings with the state suggested it had failed to employ the 3,460 people required in its contract with New York.
“They should be fined if they didn’t meet the terms of their agreement, both because that’s fair and because it’s essential for the state of New York to have any credibility in negotiating and enforcing agreements around economic development subsidies,” Democratic Assemblymember Micah Lasher said.
Tesla’s ‘zero emissions facility’ in Reno
In Reno, Nevada, Tesla has struggled to hit its solar energy goals at its Gigafactory, which Tesla’s Chief Technical Officer JB Straubel said would be a “zero emissions facility” at the time of its opening in 2016.
In January 2017, the company told investors that a 70-megawatt rooftop solar array would power the plant. But later that year, a source at the facility said that plans to power the Gigafactory through solar panels were scrapped. A video from August of that year showed drone footage of the Gigafactory’s roof with no solar panels installed, despite promotional renderings circulated by Tesla that showed a futuristic facility fully covered in panels.
Tesla eventually started building the solar roof in 2018, but it has installed roughly a tenth of the solar capacity it has promised. In September 2022, leaked audio from an internal meeting about the Gigafactory revealed that the facility had “about eight megawatts on the roof that we’re able to use on a daily basis.”
Tesla has claimed that the Reno Gigafactory will also be powered by wind and geothermal sources, but it does not appear to have ever reached net-zero emissions.
Tesla did not respond to a request for comment.
The company has also received billions of dollars in potential tax abatements from the state of Nevada to build the Reno Gigafactory, while struggling to meet its economic development goals.
When the project was announced in 2014, Nevada agreed to provide Tesla with up to $1.3 billion in tax abatements to build the plant, as well as substantial discounts on its electricity bills at the facility. The generous terms of the agreement led Martin Kenny of the University of California, Davis, to comment that Nevada “gave away the store” to Tesla.
An independent audit in 2018 found that at the Gigafactory, which opened in 2016, Tesla had fallen short of its projected economic impact by $1 billion in investments and 2,200 jobs. The factory, which Tesla originally said a decade ago would become the largest of its kind in the world, was last reported to be only 30% complete.
Tesla’s incomplete reporting in Texas
Tesla’s Austin headquarters has made almost $19 million in property tax payments to Travis County since 2021. Under the terms of the local incentive deal that encouraged the company to build its sprawling Gigafactory in the county, Tesla’s investments in the area could allow it to recoup an estimated $14 million through county-issued rebates.
But Tesla has refused to adequately disclose the job-creation metrics it needs to meet to receive the tax incentives, forcing Travis County officials to withhold the cash.
Among the benchmarks Tesla is required to meet is the creation of full-time jobs, rather than part-time or contractor positions. “Only 30% of new full-time jobs used to calculate the annual employment figure can be held by ‘contingent employees,’ such as contractors or temporary staff, during the first 10 years of the deal, and no more than 15% can be held by such workers in the second 10 years,” the Austin Business Journal noted. But Tesla has been obfuscating the number of its local employees who work full-time at the factory, instead lumping them with its total employee figures in Travis County.
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