Tesla Demands Partners Shift Away from Chinese Components
Some Key Parts Already Replaced
Battery Independence Accelerates with Nevada LFP Plant
Amid escalating tensions between the United States and China, Tesla has reportedly formalized a "de-China" sourcing strategy for electric vehicles produced at its U.S. factories. This move appears to be driven by repeated fluctuations in tariffs and instability in the parts supply chain, prompting the company to gradually reduce its reliance on Chinese-made components.
The Wall Street Journal (WSJ) reported on November 15 (local time), citing multiple sources, that Tesla instructed its partners earlier this year not to use Chinese-made parts in vehicles produced in the United States. Some key components have already been replaced with alternatives sourced from other countries, and the company has reportedly set a goal to completely eliminate Chinese-made parts from models sold in the U.S. within one to two years.
Tesla’s Shanghai facility is connected to about 400 Chinese suppliers, many of which have also supplied parts to overseas factories. However, the principle that vehicles produced in Shanghai are not shipped to the United States remains in place. Nevertheless, the severe disruption Tesla experienced in its supply chain during China’s pandemic lockdowns prompted the company to conclude that it must reduce its dependence on China for U.S. production lines. Since then, Tesla has encouraged its partners to establish separate manufacturing facilities in locations such as Mexico and Southeast Asia.
Recently, the acceleration of this de-China movement has been attributed to high tariffs imposed by the Trump administration and ongoing instability in U.S.-China trade policies. Frequent changes in tariff rates have disrupted automotive pricing strategies, and supply shortages have been exacerbated by the Chinese government’s restrictions on automotive semiconductor exports amid its dispute with Dutch company Nexperia, further increasing internal pressure within Tesla.
Efforts to achieve independence are also underway in the battery sector. Tesla had long relied on China’s CATL for lithium iron phosphate (LFP) batteries, which are mainly used in lower-priced models. However, after the U.S. government excluded vehicles equipped with Chinese-made batteries from tax credits, Tesla stopped using Chinese-made LFP batteries in vehicles sold in the United States starting last year. The company is currently building an LFP battery production facility in Nevada, aiming to begin mass production as early as the first quarter of next year.
Industry observers are closely watching whether Tesla’s latest measures will spread across the broader American automotive sector. It has been reported that General Motors has also instructed its partners to reduce the proportion of Chinese-made parts, fueling expectations that the de-China trend in the U.S. automotive supply chain will accelerate.
The WSJ commented, "Tesla’s decision serves as a symbolic demonstration that intensifying U.S.-China competition is reshaping the landscape of global supply chains," adding, "The trend of large-scale manufacturers redesigning their procurement networks to avoid geopolitical risks is becoming increasingly pronounced."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
