Tesla is just one of a number of companies trying to beat the clock before an expiring tax incentive program in Texas is gone.

It's called the Chapter 313 program and was designed to attract companies to move to Texas and in return be rewarded with, in some cases, huge tax cuts. The program is set to expire at the end of 2022 so numerous companies are scrambling to get in on the program and it's benefits.

Here is basically how the program works. Under the Chapter 313 Texas program, energy and manufacturing companies go to the local school district where they want to do business and apply for a 10-year discount on their property tax bills. The Texas comptroller’s office must also approve those agreements. What does the school district get in return? The company making the request must agree to building and/or expanding in the community and, in some cases, creating new jobs.

Forgone revenue for public schools is made up for by the state. Schools can also sign agreements directly with the companies for a supplemental payment in exchange for approving the tax break.

Tesla is based in Austin and they have their eye on this program to help defer the cost of building what would most likely be the nation’s first plant that produces battery-grade lithium hydroxide, which electric cars have to have to operate. If Tesla can participate in this program, it would enable the company to potentially avoid millions in property taxes and build the plant which is projected to cost $375 million dollars and they want to build it in Nueces County.

Knowing that the end is coming for the Chapter 313 program has created a wave of companies trying to get in on the tax cuts.

Korry Castillo, associate deputy comptroller for the state told the Texas House Ways and Means Committee on Thursday.....“We anticipated that there would be some amount of uptick. I will cut to the chase and say it is way more than what we anticipated.”

In order to meet increasing demand and stop the surge in price for lithium, Tesla is looking to build the lithium hydroxide refinery.  Over a one year period between June 2021 and June 2022, according to Trading Economics the price of lithium has increased more than sixfold. In 2021, China processed 40% of raw lithium in the world.

Tesla hopes to expand the country’s presence in the lithium production market. The application states construction could begin by the end of this year and be operational within a couple of years.

Get the full story here.

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