It is the talk of New Mexico that we’re in the running for a Tesla “gigafactory” that would produce batteries for the company’s vehicles. I’ll take this opportunity to say that we at the Rio Grande Foundation would LOVE to see Tesla set up shop here in the Land of Enchantment. It could be a true game-changer for New Mexico’s economy and a feather in the hat of Gov. Martinez’s administration.
However, as with everything, there are some caveats and details that we hope New Mexicans and their economic development specialists will consider as they work to land this “big fish.”
Giving tax breaks and incentives, even very aggressive ones like a blanket exemption from New Mexico’s onerous gross receipts tax, is okay. Allowing them the cheap or free use of land is okay. Spending significant tax money to build facilities or infrastructure is not okay. Offering the first two poses relatively few risks for New Mexico taxpayers in the event of a failure by Tesla or a decision to move for some reason. True, some costs will be shifted onto the rest of us and the land could theoretically be used for something else, but Tesla employees will also be paying a lot of taxes to work at the facility. That will benefit the state. Taking money from other taxpayers to finance Tesla’s building construction or plant could leave us holding the bag should things not pan out.
And, just to be clear, there are several significant risks to Tesla’s business model including whether lithium-ion batteries truly are the future. They also have some serious environmental issues that are often ignored.
Lastly, Tesla’s viability as a company is heavily-dependent on generous federal and state subsidies (yet another government subsidy for the rich that the left conveniently ignores). Should the political winds shift against Tesla or electric cars as they are slowly doing on ethanol, Tesla could implode entirely. This would leave New Mexico taxpayers on the hook as it is unlikely Tesla will set up shop here with onerous clawbacks.