California Offers Tax Breaks to Tesla

California is doing its best to make sure Tesla Motors TSLA stays put in the Golden State.

On Tuesday, the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) voted to give Palo Alto-based Tesla $34.7 million in tax breaks.

Officials say the exclusions are on sales and use taxes – for equipment purchases meant to expand Tesla's production of electric vehicles and powertrains, and will help to support over 2,000 permanent jobs at the facility.

“I’m pleased we could take this action to encourage Tesla to expand its electric vehicle production in California, which will create green jobs and improve our air quality,” State Treasurer Bill Lockyer, who serves as chairman of the CAEATFA board, said in a press statement.

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SFGate.com says the tax breaks will help Tesla more than double the number of Model S sedans built at its Fremont, California, facility and will also come into play as the company prepares to produce its next vehicle - the Model X SUV crossover – which is expected to debut in 2014.

In addition, the tax exclusions will assist Tesla in expanding its manufacture of electric powertrain systems and components for Toyota TM, Daimler AG DAI and other customers.

And while California does tax the purchase of manufacturing equipment, it is one of the few U.S. states that offers exemptions for environmentally-friendly businesses. A CAEATFA report says the state expects net benefits of around $24.4 million from the Tesla tax breaks.