It's been known for over a year now that Tesla (TSLA - Get Report) plans to move the production of most cars that it sells in China out of California and into a new factory in Shanghai. Production is supposed to begin there soon, and this week we got word that Tesla has opened a new Shanghai construction firm.
It's unclear what Tesla's Chinese construction company will do precisely, but it seems obvious that it will engage in ... hmm, maybe construction? Yes, Mr. and Mrs. America, Tesla will devote considerable resources -- obtained in part from U.S. taxpayer subsidies -- to build up China's techno-industrial might.
How much in subsidies are we talking about? Well, the Los Angeles Times calculated as of 2015 that Tesla had received $4.9 billion of taxpayer-funded assistance.
That number has obviously grown considerably since then. For example, U.S. consumers who bought the company's cars up until Dec. 31 were eligible for a $7,500 federal tax credit that essentially subsidized Tesla purchases. That's $750 million for every 100,000 cars that TSLA sold.
Tesla also enjoys plenty of other subsidies that aren't necessarily called that, such as "credits" for reduced emissions. For instance, the company recently cut a deal to get 2 billion euros ($2.2 billion at current exchange rates) from Fiat Chrysler (FCA - Get Report) for "pooling" the two car companies' emissions. That allowed FCA to avoid big European pollution fines.
Of course, all of these subsidies are monies that wouldn't go into TSLA's coffers but for laws that end up transferring cash from other automakers to Tesla. Who pays for this? Why, buyers of all the other Chryslers or other cars made by companies that strike similar deals. It's a tax-and-subsidy game in all but name.
But let's get back to what Mr. and Mrs. America should think about Tesla's new Chinese construction company. The big question for me is what President Donald Trump might say about TSLA setting up its "Make China Great Again Construction Co."
After all, Trump has railed against Ford (F - Get Report) , General Motors (GM - Get Report) and other U.S. manufacturers from time to time for not making American jobs their priority. At least that's the way he sees it, even though I and many others completely disagree with his decision to berate GM and Ford. But if that's the standard Trump uses, what might he say about Tesla's new Chinese construction firm?
You might recall that Tesla CEO Elon Musk has a U.S. government security clearance (or at least he did as of earlier this year) because his space-launch company SpaceX is a major U.S. government contractor. Will the Trump Administration ask why Musk is opening up a Chinese construction company and how his tight connections with the Chinese fit into all of this? Will the U.S. Defense and Justice departments demand answers different from the lack of a comment that Tesla gave this week to Reuters, which broke news of TSLA's new construction firm?
Tesla-watchers like myself are waiting to hear the explanation -- and to see if Trump weighs in on all of this.