Someone Tell the President: Tesla’s Musk Promised China $320M Tax Revenue a Year
By Anton Wahlman
Tesla (TSLA) lost $1 billion in 2018, and in first-half 2019 it lost more than $1 billion.
It should therefore come as no surprise that Tesla isn’t much of a U.S. taxpayer. To the contrary, it receives several hundred million dollars per quarter in U.S. subsidies.
That was $713 million in U.S. subsidies alone, for the third quarter last year. But where is all this money going?
Thanks to Tesla’s SEC Form 10-Q dated July 29, we now know to whom Elon Musk has promised to give these U.S. taxpayer subsidies.
Guess what? He’s promised the Chinese government a minimum of $320 million a year.
You see, instead of Tesla making cars in the U.S. and shipping them to China, Tesla is now building a factory in China.
What did Tesla and Musk have to promise in order to be allowed to build a factory in China?
Just look at page 31 of Tesla’s 10-Q: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318605/000156459019026445/tsla-10q_20190630.htm
“Under the terms of the agreement, we are required to spend 14.08 billion renminbi [$2.04 billion] in capital expenditures over the next five years, and to generate 2.23 billion renminbi [$320 million] of annual tax revenue starting at the end of 2023.”
It gets worse.
“If we are unwilling or unable to meet such target or obtain periodic project approvals, in accordance with the Chinese government’s standard terms for such arrangements, we would be required to revert the site to local government and receive compensation for the remaining value of the land lease, buildings and fixtures,” the filing says.
So let’s see what this means:
1. Tesla gets $713 million in U.S. subsidies per quarter.
2. Tesla moves production from the U.S. to China.
3. Tesla invests $2.1 billion in a Chinese factory.
4. Tesla promises China $320 million in annual tax revenue.
5. If Tesla can’t pay, China nabs the factory.
U.S. taxpayer funds — and technology transfer — secured!
I can only imagine what President Donald Trump would say if General Motors (GM) or Ford (F) did this. He would be up in arms, burning up a tweetstorm.