(Bloomberg Opinion) -- The made-in-China Tesla has arrived. That’s getting investors excited about everything that goes into the electric vehicles — from valves and auto glass to headrests and seats. The enthusiasm for Tesla’s Chinese suppliers may be premature, though.

Beijing has given Elon Musk all that the U.S. couldn’t: cash, concessions and cheap development costs. Tesla Inc.’s revenue from China accounted for about 11% of its total for the quarter ended September, up from 6% a year ago. Last month, Tesla secured an additional $1.6 billion loan from Chinese banks. On Tuesday, the Tesla chief executive officer was in Shanghai for a ceremony to hand over the first China-made Model 3 sedans to customers.

China has been production heaven for Musk. Tesla’s capital expenditure for the Shanghai factory declined 65% on a unit production capacity basis compared with its U.S. manufacturing hub in Fremont, California, according to analysts at China International Capital Corp. The Shanghai plant was built in less than a year and can already produce more than 3,000 cars per week. Compare that to the depths of what Musk called his “production hell” in 2018, when he was sleeping on a couch or under a desk as the company struggled to meet a weekly goal of 5,000 cars in Fremont.

That progress is fueling a rally in shares of Chinese suppliers. Take Zhejiang Sanhua Intelligent Controls Co., one of the country’s largest providers of heating, ventilation and air-conditioning components. Sanhua shares have risen more than 70% in Shenzhen since the middle of last year, as made-in-China Teslas came closer to becoming a reality. Shanghai Baolong Automotive Corp., which provides tire-pressure monitoring systems, has seen a similar advance over the same period; Ningbo Huaxiang Electronic Co., a maker of rear-view mirrors, has climbed more than 60%.

Tesla will have to sell a lot of cars in China to justify those gains. The auto sector accounts for only a small portion of Sanhua’s revenue. Its valves, which help heating and cooling efficiency, contribute about 250 to 400 yuan ($36 to $58) to the value of a Model S and X, and about 1,000 yuan per Model 3, according to CICC analysts. Prices of the Model 3 will start from 299,050 yuan in China, Tesla said last week.

Granted, Tesla isn’t the Chinese company’s only auto customer. It recently signed a 600 million yuan contract with BMW AG, and has contracts with other carmakers. That’s all cause for optimism. However, much of the excitement pushing up the stock lately has been driven by Tesla’s prospects. While this points to confidence in Sanhua’s valves (and the components produced by other suppliers), it doesn’t mean there will suddenly be huge demand.

Tianjin Motor Dies Co., another maker of parts for Tesla, attributed “irregular” movements in its stock price to the U.S. company in a filing to the Shenzhen exchange on Tuesday as its shares jumped by the 10% daily limit. Tesla is no different from other customers including Mercedes-Benz AG and BMW, and its business with the U.S. electric-car maker carries “market development risk,” Tianjin Motor Dies said. The company’s shares have surged 28% this year.

Meanwhile, China is scaling back subsidies for electric vehicles and plowing money instead into the infrastructure that will support them. Sales have been falling since the government reined in its largesse and are running below Beijing’s annual target of 2 million cars. Demand is uneven and significant barriers to adoption remain.

Even if Tesla operates the Shanghai plant at its full capacity of around 150,000 cars, that won’t translate into a bonanza for suppliers. In addition, the subsidies that have helped the U.S. electric-car maker lower its prices could mean component makers soon start feeling pressure to cut their own prices.

China’s electric-car sales targets will require more than 100 billion yuan of subsidies, according to estimates by Goldman Sachs Group Inc. analysts. That looks expensive, compared with the cost of past stimulus packages. The government may balk. After all, it knows all too well how helping favored industries too much can lead to overcapacity.

The bottom line is that Musk’s Chinese plans lean heavily on government support. If any part of that falters, the rosy projections that have buoyed suppliers’ shares may implode. Under its agreement with the government, the U.S. company is required to make 14.08 billion yuan of capital expenditures and generate more than 2.23 billion yuan of annual tax revenue starting at the end of 2023, according to Tesla filings. The company says it can hit both those targets even if car production is “far lower” than what it has forecast.