Tesla tax break for building battery factory buried in aerospace bill

Reporting from Sacramento —  Gov. Jerry Brown has quietly approved a potential property tax break for electric car maker Tesla Motors Inc. in hopes of enticing the high-tech, Palo Alto company to build a giant battery factory in California.

The potential savings is buried in newly passed legislation, AB 2389 by Assemblyman Steve Fox (D-Palmdale), that would provide Lockheed Martin Corp. with a financial incentive to manufacture new stealth bombers in the high-desert.

On Thursday, the governor signed into law the controversial bill that offers the aerospace giant a $420-million tax credit over 15 years.

The administration and state lawmakers plan to make a similar offer to the state’s largest defense company, Northrop Grumman, in August.

The Fox bill was hotly debated in a committee and on the floors of the Assembly and Senate on July 3. But none of the discussion focused on obscure wording in the bill that also allows local governments to provide property tax discounts to firms with national identification numbers that indicate they make electric batteries.

That would be Tesla, if it creates thousands of new jobs by putting its much-sought-after battery factory in California.

Tesla Chief Executive Elon Musk has said that he’s considering Arizona, Nevada, New Mexico and Texas, as well as California, for his so-called gigafactory. However, company spokesman Simon Sproule declined to comment on the location search.

Brown’s Office of Business and Economic Development declined to describe the ongoing negotiations between the administration and Tesla. But Chief Deputy Panorea Avdis stressed that the administration is “working hard to make sure that (Tesla) continues to grow in the state.”

Twitter: @MarcLifsher