Tesla Paying $323 Million in Taxes for Chinese Plant, Getting US Dollars for US Plant
Bloomberg claims that Tesla has agreed to pay local Chinese governments around $323 million taxes each year to build a Shanghai plant on government property. The payments must start at the end of 2023, or the company has to return the land, complete with its factory. In addition, Tesla must invest around $2 billion on the plant itself over the next five years.
Tesla claims it plans to make around 500,000 cars there in the next 12 months, though traditionally Tesla has delivered less than promised, later than promised.
While Tesla has benefited greatly from U.S. laws, including a $7,500 per car subsidy which applied to its luxury cars as well as its “everyday” $40,000 versions, not to mention “cap and trade” payments from other automakers (notably Fiat Chrysler Automobiles). The company has never turned a full-year profit, and therefore has never paid income taxes; thanks to those years of losses, the company will also not have to pay income taxes for some time after it becomes profitable, should that day every arrive.
Tesla is now lobbying for extra subsidies from the United States government, since the $7,500/vehicle subsidy has reached its end. Elon Musk’s companies have gained around $4.9 billion in U.S. and local government subsidies, according to the Los Angeles Times. While the Chinese authorities expect tax revenues from Tesla, New York State is paying $750 to build a Tesla/Solar City factory in Buffalo, which Tesla (having merged with SolarCity) will lease for $1 per year—while avoiding property taxes. Nevada gave Tesla $1.3 billion in incentives to build its Reno battery plant.
Clark Westfield grew up fixing up and driving past-their-prime American cars, including various GM and Mopar V8s. He has ghostwritten auto news for the last few years, lives in Farmingdale, New York, and can be reached at +1.516-531-4021.