Will Tesla lose its tax incentives, rebates because of Austin layoffs?
AUSTIN (KXAN) --- For years, Tesla has received millions of dollars in tax rebates and incentives from both Travis County and Del Valle ISD for its Gigafactory.
But will any of that go away because of the Austin-based company's recent round of layoffs? Experts KXAN spoke with don't think so.
The layoffs
On Monday, news broke that Tesla is firing more than 10% of its workforce globally.
Tesla CEO Elon Musk detailed the plans in a memo sent to employees.
Musk’s memo said as Tesla prepares for its next phase of growth, “it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” The New York Times and CNBC reported.
KXAN reached out to Tesla for additional comment but has not heard back yet.
Some of those employees are in Austin. KXAN spoke with one of them who asked us to conceal their identity.
"It was very, very cold. I'm a single father. It's sickening. It's honestly stomach turning."
Former Tesla Employee
The employee said people were fired across different departments.
"It's not just new people. It's even people that have been there three years," they said. "People that have been there and have been loyal to the company all are now gone."
Travis County tax rebate
Tesla receives $14 million over ten years in tax rebates from Travis County. County commissioners approved the tax incentive agreement back in 2020.
"Tesla promises to create a certain number of jobs, promises to do a certain amount of investment in equipment and the like. In return, they get what we call tax abatements or tax credits or tax grants," said University of Texas Professor of Accounting Michael Granof.
According to county documents, Tesla is supposed to have 5,096 existing jobs in 2024 to comply with the agreement.
But there are circumstances where Tesla could lose its tax rebate.
"If they go below 75% of that number, then they will lose their grant."
Michael Granof, University of Texas Professor of Accounting
Granof said 75% of the required 5,096 employees is around 3,800 employees.
Even with the layoffs, he expects the company will continue receiving that money.
"Assuming that Tesla was in compliance prior to the current cut, it appears that they're not immediately subject to any grant reduction or what we call 'clawback,'" Granof said.
Travis County shared the same sentiments. It told KXAN it doesn't foresee any impact with regards to Tesla's employment numbers.
Incentives from Del Valle ISD
Back in 2020, the Del Valle Independent School District approved an incentive agreement with Tesla, which allowed the car maker to build its electric vehicle manufacturing facility on land that’s in the district’s jurisdiction.
The incentive agreement allows Tesla to save money on its property tax bill paid to the school district — more than $68 million — by capping the property value for 10 years.
Tesla was able to get this thanks to a former Texas law, Chapter 313.
School districts were able to temporarily limit a property's appraised value to encourage business investment. The property owner would then create a certain number of permanent, full-time jobs.
According to documents, Tesla was only required to create 25 jobs to be in compliance with.
Over the years, critics argued certain requirements under Chapter 313 were whittled away and some companies were bringing few or low-paying jobs with little benefits.