Tesla Said to Consider Exporting Made-in-China Electric Vehicles to the US

Tesla is considering exporting Chinese-made electric cars to the United States, two people with knowledge of the plan told Reuters, a move that would reflect the automaker’s deep cost benefits at its Shanghai plant and slower demand from Chinese consumers.

Tesla has been investigating whether parts made by its China-based suppliers comply with North American regulations, and if they do, it could send China-made Model Y and Model 3 cars to be sold there as soon as next year, the people said. ., who declined to be identified as the matter is confidential.

That could also open up an export channel to Canada, one of the people said.

Tesla did not immediately respond to a request for comment.

Tesla’s Shanghai Gigafactory has the capacity to produce 1.1 million electric vehicles a year after being upgraded earlier this year, making it Tesla’s most productive production facility.

The Shanghai plant makes Model 3 sedans and Model Y crossovers that will be sold in China and exported to markets including Europe, Australia and South East Asia.

Until recently, Tesla has been selling or exporting all the cars it can produce in Shanghai, but inventory levels rose to their highest level in October, according to CMBI consumer data.

In addition, factors including the cheap yuan against the US dollar, low raw material prices in China and rising Tesla and new car prices in the United States have combined to make exports from China to the United States competitive. which could costs, people with information of said programs.

The plan, if implemented, could create new problems for American consumers. Under the terms of the new electric vehicle subsidy and manufacturing incentive program signed into law by US President Joe Biden, the incentive available for each vehicle may vary depending on whether it is imported.

There may also be political conflicts. Tesla was widely seen as one of the biggest beneficiaries of the Biden administration’s IRA, which offers rebates of up to $7,500 (about Rs. 6 lakh) on EV purchases as part of a law aimed at pressuring automakers to downsize. Their Instilling trust in China.

Tesla’s Chief Financial Officer, Zachary Kirkhorn, told investors last month that the automaker is “very well positioned to receive a significant portion” of the incentives offered under the IRA for EVs and energy storage batteries.

Until now, Tesla’s strategy has been to build the cars it sells in North America at its plants in Fremont, California, and Austin, Texas.

The California plant, Tesla’s first, produces the Model S, Model three sedans and the Model X and Model Y crossovers. The Texas plant, which opened earlier this year, makes the Model Y and will produce Tesla’s upcoming Cybertruck.

Tesla is also expanding production at the plant it opened in Berlin earlier this year. Output from the Berlin plant will reduce demand for other exports from China, one of the sources said.

At the same time, the price gap between Tesla cars sold in China and the United States has been widening, reflecting both higher prices in the US and new discounts in China.

In China, where CMBI analysts warned of a looming “price war,” Tesla cut the initial prices of the Model 3 and Model Y in China by 9 percent last month.

On Monday, it offered an additional discount to buyers who take delivery this month and purchase insurance from one of Tesla’s partners.

Tesla sells the Model Y at the equivalent of $49,344 (roughly Rs. 30 lakh) in China, compared to the US price of $65,990 (roughly Rs. 53 lakh). Cars made in China face a US tariff of 27.5 percent, while light trucks face a 25 percent tariff.

China, the world’s largest auto market, imposes a 15 percent tax on imported cars.

In 2018, before Tesla’s factory in Shanghai became operational, Chief Executive Officer Elon Musk had asked then-President Donald Trump to raise the prices of cars exported to the United States from China in order to reach a “good result” where both sides were equal and “equal” . average” values.

Tesla would not be the first US automaker to export Chinese-made cars to the United States. General Motors imported the Buick Envision SUV and won a bid to be exempt from the 25 percent US tariff imposed by the Trump administration.

© Thomson Reuters 2022

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