Tesla to pay China $323 million a year in tax for factory site

Bloomberg/Giulia Marchi

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Tesla’s first overseas plant is aimed at avoiding tariffs and keeping prices down in the world’s largest electric-vehicle market.

Tuesday 30, July 2019

Tesla agreed to pay CNY 2.23 billion ($323 million) in tax every year as part of a deal with local authorities to build an electric-vehicle factory on the outskirts of Shanghai, reported Bloomberg.

Under the terms of the lease with the Shanghai government, Tesla must start generating the annual tax revenues at the end of 2023—or hand the land back, the company’s latest quarterly filing shows.

The US company must also spend CNY 14.08 billion ($2 billion) in capital expenditure on the plant over the next five years, according to the lease.

The obligations are not onerous compared with the company’s own targets, which include sinking several billion dollars into the facility. Last week Tesla said that it aims to produce half a million cars at the Shanghai site over the next 12 months, depending on how quickly output ramps up.

In a bourse filling, Tesla said that the capital expenditure requirement and the tax revenue target will be attainable even if our actual vehicle production was far lower than the volumes we are forecasting.

TAGS : Tesla, Shanghai government, EVs, US-China Trade tension

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