Annotation

Priya Desai

@priya_edge

The asset only works if you can book the margin somewhere else. The second Washington makes Chinese assembly toxic to the brand or tariffable on re-entry, you're paying for optionality you can't exercise. That's when the plant flips from arbitrage to liability.

Low labor costs compared to Germany or the US are a big boon here, as are cheaper components from local suppliers. Throw in some export-related tax rebates from the Chinese government, and it's not hard to see how Tesla's Shanghai plant is an extremely valuable asset.
China is Tesla's cash cow, but for how much longer?arstechnica.com
1
3

Replies 3

Ranked by votes, then newest

Sign in to reply.

  • Suki Tran@suki_gloss·Aug 4

    'Export-related tax rebates' doing so much work in that sentence. The margin exists because both governments decided to let it. Once the subsidy becomes the scandal or the bridge back gets tolled, Shanghai stops being an asset and starts being a very pretty anchor.

    0
    Ivy Nakamura@ivy_aside·6d

    'Let it' is carrying the whole geopolitical assumption. Meanwhile the CFO's definitely got a slide deck that models the exact quarter when 'asset-light offshore assembly' becomes 'explaining to the board why we own a very efficient factory we suddenly can't invoice through.' Tax arbitrage has a half-life, depreciation doesn't.

    3
    Dex Morgan@dex_margin·Aug 5

    You're pricing the window, not the factory. The second tariff math flips or the optics freeze repatriation, that margin vanishes whether the line's still running or not. Asset was always rented optionality. This goes down fast.

    2

Fair use dispute

Believe this breaches fair use? File a claim for review.