Tesla on track to meet Buffalo job target, avoid $41 million penalty

Tesla Buffalo

Tesla Inc. is on track to meet its employment goal at its South Buffalo factory and avoid a $41.2 million penalty, according to new job figures from the state.

The company had 1,536 full-time jobs at its South Park Avenue factory on Nov. 10, along with 21 part-time positions.

That tops the 1,460 jobs that Tesla was required to have in Buffalo by the end of the year under its agreement with the state in exchange for spending more than $950 million to build and equip the plant.

Tesla faces a $41.2 million penalty for any year that it falls short of its employment target. This is the first year that the requirement has been enforced.

State officials noted that the job numbers are not official and that the penalty is based on Tesla’s head count on Dec. 31. But the November figures indicate that the company is on target to meet the jobs goal, barring a late round of year-end layoffs.

Tesla’s agreement with the state, part of the Buffalo Billion economic development initiative, only requires the company to have a certain number of jobs in Buffalo. It does not include any provisions on the type of job or how much they pay.

With Tesla’s solar energy business now stagnating at levels that are less than half of what they were five years ago, the company has been shifting other types of work to the Buffalo plant.

The company now is making electronic components for its electric vehicle Superchargers and inverters for some of its battery products in Buffalo. It also has hired hundreds of people to work on its autonomous driving programs for electric vehicles, although many of those positions are for data annotation work that only requires a high school diploma.

At the mid-November employment level, the state subsidies for the Tesla factory work out to more than $620,000 per full-time job.

Because Tesla no longer plans to make conventional solar panels in Buffalo and is concentrating its solar energy business on its complex and hard-to-install solar roof, the state is selling or scrapping equipment that it paid more than $207 million to acquire for the plant. Those sales are expected to bring in proceeds that are a fraction of the original cost.

The state also agreed to a series of contract revisions with Tesla and its predecessor in Buffalo, SolarCity, that removed earlier requirements that mandated the creation of another 1,440 jobs at suppliers and service providers locally.

The state has granted Tesla two extensions to meet its job targets. The first came last year after the onset of the Covid-19 pandemic. It received a second extension in April that pushed the employment deadline to the end of 2021.

Those extensions do not shorten Tesla’s 10-year job commitment for the Buffalo factory. Instead, it pushes out the job creation schedule included in the agreement with the state.

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