In order to expand the Fremont plant so it can start building the affordable electric Model 3, Tesla applied for a 106-million-dollar tax break.
Tesla has already started to ramp up production as it aims to achieve an output rate 500, 000 cars per year. Its Fremont factory currently has a building pace of 2, 000 vehicles each week, which translates into an annual rate of 104,000 units. But the huge production leap will be made when the Model 3 hits the lines next year, a car that has gathered nearly 400,000 preorders. The electric automaker is preparing for the huge task ahead by spending 1.26 billion dollars on adding an extra assembly line on facility to cope with the upcoming rate.
The company has received so far millions of dollars from the state, most recently a 39-million-dollar break on sales tax linked to its 463-million-dollar expansion of the Fremont plant to boost production of the Model S and Model X. But state records obtained by Reuters showed Tesla also applied for a 106-million-dollar tax break aimed to support the Model 3 project. It is reportedly said that the state also granted an incentive package of over 1 billion dollars for its at its Gigafactory. CEO Elon Musk recently said that Fremont could potentially make up to 1 million vehicles per year. Tesla set a deadline for Model 3 internal parts and supplier parts for July 1st, 2017, for the first deliveries to start later that year.