Tesla has committed to paying roughly $323 million in annual Chinese taxes starting at the end of 2023 as part of the electric automaker’s lease agreement with the Shanghai municipal government where its new Gigafactory is located.
In addition, Tesla has committed to invest approximately $2.04 billion in the next five years into the new production site, Tesla’s 10-Q filing with the Securities and Exchange Commission reveals.
If the automaker is unable to meet these terms, it will have to return the site to the local government and receive compensation for the remaining value of the land lease, Nikkei Asian Review reports.
Also Read: Tesla’s Chinese “Surprise”? Announcing Local-Made Model 3 Pricing On May 31
Tesla broke ground at its Shanghai Gigafactory in January, and evidently, the site will require substantial investments in the years to come. Nevertheless, the company is confident that, by building certain vehicles in China, it will be able to slash the price of locally-sold vehicles. In late May, it was revealed that Chinese-made Tesla Model 3s will be priced from 328,000 yuan ($47,628), or 13 per cent less than the ones currently imported from the United States.
Production is set to kick off by the end of the year, with up to 150,000 Model 3s being built at the site annually. The Model Y will also be produced at the same plant, and at Hawthorne, California, for other markets.