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Border adjusted tax plan

Discussion in 'TSLA Investor Discussions' started by renim, Feb 6, 2017.

  1. renim

    renim Member

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    upload_2017-2-7_9-16-5.png

    Your Car Could Cost Up to $17,000 More With the Proposed Border Tax

    in addition to Kenliles link, there are further factors also to consider.

    Border tax labour adjustment, also reduces the cost of vehicles, so an exporter is further advantaged vs an non exporter/non importer. Tesla has perhaps 14,000 employees currently and exports about half of production (currently 40%) The effect of netting out the cost of 40% of 14,000 employees will be quite significant. This is THE big issue, not much talk about it, but for an exporter like Tesla it is a massive boost.

    Depending on how confident the market is that this will happen, will affect Tesla's ability to raise money for expansion beyond T3. If there is strong confidence that the administration has the support to implement a 'border tax' of some form, then Tesla can ramp up funding for T3 SUV, which given both global and USA car tastes, is the real deal.

    German Tesla competitors (like S class) are built in a place with a 20% VAT, and a 10% tariff. America has nil VAT, and a 2.5% tariff. Just equalizing that results in a benefit to Tesla of greater than $10,000 per car, perhaps greater than $20,000 per car. This would result in massive growth benefits for Tesla.
     
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  2. Rarity

    Rarity Member

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    There are various implementations of the border-adjusted tax and I don't think anybody knows for sure what is going to come out of the legislative process or whether it can be passed. So it would be important to see Baum & Associates's implementation assumptions.

    It appears that the House Budget Committee chairman has one or two preferred implementations. But the Senate GOP is not thinking along the same wavelength -- perhaps not a border-adjusted tax at all.
     
  3. Dwdnjck

    Dwdnjck Member

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    The thought that Reublicans will go along with tariffs is..........?
     
  4. adiggs

    adiggs Active Member

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    It's an important component of the platform of the leader of the free world and Republican party?
     
  5. Dwdnjck

    Dwdnjck Member

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    What does Angela Merkel have to do with this?
     
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  6. renim

    renim Member

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    The GOP proposal is very very similar to a EU style VAT, but with a labour deduction (ie payroll credit - instead of tax)
    whereas
    Trump proposal is rather similar to EU/China style tariff.

    simply a straight adoption of EU VAT,(20%) and EU car tariff (10%) would have a massive benefit to Tesla, effectively wiping out all remaining competitor's profitability in large premium sedan class. Could Tesla S go to 80% market share in USA, absolutely, if this was enacted, and supply could expand.

    The last remaining bit, the labour adjustment is what colours this as not an EU VAT. Tesla would do very well out of it (actually Tesla would make off like a bandit). Gut feel, the labour adjustment is akin to a $10,000 benefit for Tesla S/X class (and $5,000 benefit for model 3) Not much detail on how it would be executed.

    The Koch bros and other importers would hate this type of tax Koch-Backed Group Pledges to Fight Controversial Border Tax exporters will love it.
     
  7. jsmay311

    jsmay311 Member

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  8. renim

    renim Member

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    wither labour deduction is legal or not under WTO, is fairly trivial compared to what China does under the WTO. There are a plethora of rules that China simply interprets her own way. USA has the same option if she desires. China won't formally object to this one, and no one else matters.

    but even without labour deduction, there are many deals that USA can renegotiate to parity, which help Tesla competitive position immensely.
     

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