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The economic footprint of Tesla in California

15 May 2018 Leslie Levesque

In April 2018, Tesla commissioned us to conduct a study that assessed the economic contribution the company's California operations made to the local economy during 2017. We determined that the electric vehicle maker and renewable energy company infused $4.1 billion into the state economy: $2.0 billion from transactions with over 2,650 California suppliers and $2.1 billion in wages and equity paid to the employees in the state. This stimulated a total of $5.5 billion of sales activity, contributed $5.1 billion to California's gross state product, and supported 51,000 direct and indirect jobs in 2017.

To assess the impact of Tesla's operations in California, we examined the company's direct spending on inputs to production and modeled how they filtered through the state economy from the initial Tier-1 Suppliers (the California-based companies that supply parts and services directly to Tesla) through an extended California supply chain. The modeling also captured how consumer spending activity of Tesla employees induced additional economic contributions within the local economies. In addition to the state-level assessment, our team quantified these impacts for the economies of five counties and the City of Fremont. The findings are reported in terms of Tesla-related employment, wages, stimulated sales activity, value added, and government revenue.

You can read the full report.

Additional key findings for 2017:

Employment and Wages

  • Tesla's operations supported over 51,000 jobs in California. Tesla directly employed 20,189 workers while another 31,424 were ultimately supported by Tesla's local supply chain purchases and its employees' consumer activity. Thus, for every Tesla employee, another 1.5 jobs were supported in California.
  • Tesla paid its employees a total of $2.1 billion in wages and equity in FY2017. Every employee is given equity upon hire.

Sales Activity and Value Added

  • Tesla infused approximately $4.1 billion into the California economy: $2.0 billion in transactions with over 2,650 California Tier 1 suppliers (average spending of just over $750K per supplier); plus, Tesla paid $2.1 billion in wages and equity to its California-based employees.
  • Tesla's operations directly contributed an estimated $2.0 billion to California's gross state product (GSP) in 2017. The GSP contribution grew to $5.1 billion when the Tier 1, Extended Supply Chain and Induced effects are included.
  • Tesla ultimately drove a total of $5.5 billion in sales activity across California. Approximately 1/3 of the sales activity was stimulated by the spending of Tesla's employees. We estimate that Tesla employees spent about 77% of their wages and equity on consumer purchases. Much of the spending remained in the local economies, ultimately stimulating $1.9 million of sales activity.
  • Every dollar Tesla spent with suppliers generated $0.8 dollars in additional spending throughout the California economy.
  • Every dollar that Tesla paid to its California employees led to $0.9 dollars in consumer spending across the state.

Government Revenues

  • Tesla's direct payments to state and local tax authorities in California totaled $328 million.
  • The Tier 1, Extended Supply Chain and Induced consumer actives stimulated by Tesla generated close to $345 million in California state and local taxes plus over $452 in federal taxes.

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