Are they paying anything for that lease? I mean, beyond the standard payment to lease the land from the Chinese government (which technically owns nearly all the land in the country, including all the urban land)?
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China Gigafactory
- Thread starter nursebee
- Start date
Doggydogworld
Active Member
They haven't disclosed anything so it's all guesswork. It could be a ridiculous deal like Buffalo, where politicians funnel taxpayer money to their construction firm cronies in the name of economic development.
Frankly, given Shanghai's eagerness to get Tesla, I'm betting it is just like that only more extreme.
Doggydogworld
Active Member
Ha - as I wrote that they were disclosing a few tidbits in the 424B5:
In particular, Gigafactory Shanghai is a key strategic component for our growth in China, the largest electric vehicle market in the world, and we are proud to be the first wholly foreign-owned vehicle manufacturer in the country. As part of this project, we have agreed with the local government to spend approximately $2 billion in capital expenditures over the next five years (which is already included in our capital expenditure plans), and to generate approximately $270 million of annual tax revenues starting at the end of 2023. We believe the tax revenue target will be easily attainable even if our production were far lower than the volumes we are planning, although if we are unwilling or unable to meet such target or obtain periodic project approvals, we would be compensated for the remaining value of the land lease, buildings and fixtures and revert the site to the government.
gnuarm
Model X 100 with 72 amp chargers
There are any number of reasons for the $11 million number. One is that invoices are typically paid on 30, 60 or even 90 day terms. Then there is the fact that the loans and the construction are not actually bound. They can pay for the construction any way they wish. When they borrow the money, they have to start paying interest, so it is smart to spend cash until you actually need the loan.
favo
P3D+ owner
jhm
Well-Known Member
What are the prospects for Tesla Shanghai exporting product to other parts of the world? I know the focus is on supplying the domestic Chinese market, but I wonder if there could be some further advantages to exporting too. For example, suppose Tesla wants to import Model S and X into China without import duties. Would it be possible to have a deal where export from China can be used to offset import duties on these vehicles? It seems that Tesla could easily become a net exporter from China if the government were to sign on to a netting agreement. Clearly, China wants to be a net exporter of EVs, and Tesla could be a huge opportunity for China to do that.
I'm also thinking about this in context of the tariff war with China. If Tesla were a key part of making China a serious net exporter of EVs, it seems this could offer Tesla some shelter from that trade war.
I'm also thinking about this in context of the tariff war with China. If Tesla were a key part of making China a serious net exporter of EVs, it seems this could offer Tesla some shelter from that trade war.
Or maybe even a Tilburg scenario? My understanding was the Tesla Tilburg facility was used to assemble several larger subassemblies in to a finished car, thereby bypassing EU import duties on automobile imports.
Having a full-blown factory in China could allow import of less-finished components, or maybe even not requiring import of certain components.
The importance of Gigafactory 3 cannot be understated. Tesla needs to get Giga3 up and running as fast as humanly possible. There are two reasons for this:
1) Chinese tariffs (it's obvious)
2) Trump is looking to start an auto war with the EU. He is supposed to have made his decision by 5/18. See below.
EU trade chief sees possible extension to May 18 deadline for U.S. car tariffs: newspaper - Reuters
This trade war can be a blessing in disguise as China has not put tariffs on Tesla cars, and this further derisks Trump starting a fight with the Europeans.
We need a China gigafactory, as once Trump patches things up with China, the EU is next. And we need to be able to ship cars from Giga3 to Europe.
1) Chinese tariffs (it's obvious)
2) Trump is looking to start an auto war with the EU. He is supposed to have made his decision by 5/18. See below.
EU trade chief sees possible extension to May 18 deadline for U.S. car tariffs: newspaper - Reuters
This trade war can be a blessing in disguise as China has not put tariffs on Tesla cars, and this further derisks Trump starting a fight with the Europeans.
We need a China gigafactory, as once Trump patches things up with China, the EU is next. And we need to be able to ship cars from Giga3 to Europe.
I don't think GF3 will have the capacity to ship to Europe, I think the Chinese market will more than consume all it's capacity, with cheaper price & Hugh EV demand in China.
gnuarm
Model X 100 with 72 amp chargers
Don't quote me, but I thought I've seen Tesla refer to the Shanghai factory as supplying the "Asian market". So they may be planning to sell cars made there to other countries in Asia, or this may just be a euphemism for China. Don't know.
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