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rjdagost | 6 years ago

The history of the Buffalo "gigafactory" is rather sordid... In a nutshell, Tesla and its subsidiaries made large employment and economic growth promises to the state of NY in exchange for massive subsidies (almost $1B total). The state wanted to stimulate growth in an economically depressed region, but those growth expectations have not materialized at all. And now, at least some of the NY state taxpayer financed equipment is apparently being shipped elsewhere or sold instead of helping the economy of Western NY. That's the story here. But the entire story goes much deeper.

Tesla fans don't like to admit it, but the Buffalo "gigafactory" project has been a textbook example of government waste on corporate welfare. Multiple people have gone to jail for corruption / bid rigging on the project. Tesla's subsidies were supposed to be contingent on achieving hiring and economic output goals, but those original requirements have been retroactively watered down multiple times so as to prevent subsidy clawbacks. A local journalist (Dan Telvock) has been detailing considerably more chicanery that has gone done at the Buffalo gigafactory.

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Robotbeat|6 years ago

This is just not accurate. The Buffalo plant economic stimulus package had a clawback provision if Tesla doesn't meet employment milestones. They have been meeting those milestones and so will not have to pay the fee: https://buffalonews.com/2020/02/13/tesla-looks-like-a-good-b...

I know people want to make this into some corruption scandal (blaming it either on the state or on Tesla or both), but the state did their job by putting these employment requirements in their contract WITH PENALTY, and Tesla is doing their job by hiring enough people to avoid the penalty.

What's really the problem, here? 5/6ths utilization of capital equipment seems pretty good, particularly in a fast evolving field like solar power (where things like bifacial panels and Tesla's integrated solar roof weren't really a thing when the deal was first signed).

rjdagost|6 years ago

You're trying to act like everything is A-OK with this project, when it has in reality been a huge waste of public money. First, there has already been a large corruption scandal centered on this project, with people in prison because of associated corruption (search Alain Kaloyeros). Second, those Tesla employment requirement milestones have been repeatedly reduced to require fewer jobs, and the types of required jobs has also been watered down. The requirements in the original agreement are more stringent than the 1460 jobs required now.

The state of NY just wrote off 92% of the value of its $957M investment in the factory: https://buffalonews.com/2019/11/08/pennies-on-the-dollar-the... Does that sound like Tesla is operating at 5/6 utilization of capital equipment?

Panasonic just announced that they're pulling out of the Buffalo factory: https://www.eveningtribune.com/news/20200227/after-nys-750m-... Tesla just wasn't giving them the business that they were promised in 2016 when they joined the project.

I had high hopes for this project when it was announced. It is near my hometown, and I thought it might be a good boost for the local economy. All it seems to have been is a big siphon from public funds, but not a siphon to where it is needed.

_ea1k|6 years ago

From what I have heard recently, they may not end up doing the solar roof there. It sounds like the hardware for that is coming from China instead. OTOH, they are getting new production lines for superchargers and other things.

You are definitely right that it isn't clear cut. From what I can see, Tesla has met their contractual obligations even though things haven't gone as planned.

xyzzyz|6 years ago

How much of these subsidies are cash, and how much are tax breaks? Cash subsidies from taxpayers are bad, I agree, but at least with the tax breaks, the taxpayers are not worse off: if the alternative is no factory at all, then they don't lose anything on the tax breaks, because that tax revenue wouldn't have had existed anyway.