Tesla requires its suppliers to exclude Chinese-made parts when producing U.S. cars, becoming the latest U.S. automaker after General Motors to take such a move, the Wall Street Journal reported. Earlier this year, the company decided to stop using Chinese suppliers to supply Tesla vehicles made in the United States, the Wall Street Journal reported today, citing people familiar with the matter.
According to reports, Tesla and its suppliers have replaced some parts made in China with parts produced in other countries.
Some sources indicate that Tesla plans to replace all other parts with parts produced outside of China within the next year or two.
Since the outbreak, Tesla has been working to reduce its reliance on Chinese components for its U.S. models. However, the report pointed out that sources revealed that the company accelerated its strategy to get rid of dependence on Chinese parts and components this year after U.S. President Trump imposed high tariffs on Chinese imports.
According to the Wall Street Journal, some people familiar with the matter said Tesla executives have been grappling with the uncertainty caused by fluctuating tariffs during the Sino-U.S. trade war, which has made it difficult for the company to develop a consistent pricing strategy.
The report quoted some sources as saying that discussions within Tesla about accelerating the diversification process have intensified in recent weeks as the supply of automotive chips has been disrupted again due to the dispute between China and the Netherlands.
The United States is Tesla's largest market, with China ranking second. Tesla has a factory in Shanghai, its largest in the world, that produces Model 3 and Model Y models.
Tesla executives have repeatedly said over the past few years that more than 95% of the parts for the Shanghai factory are sourced locally.
According to a report by the Shanghai Securities News on November 26, 2024, Tesla has signed contracts with more than 400 first-tier suppliers in China, more than 60 of which have been integrated into its global supply chain system.
According to reports, in addition to Tesla, General Motors is also implementing a de-China strategy for its supply chain.
Reuters reported on November 12, citing people familiar with the matter, that General Motors executives have instructed suppliers to find alternative sources of raw materials and parts outside China, with the ultimate goal of completely shifting the supply chain away from China.
According to the report, some sources revealed that General Motors has set a deadline of 2027 for certain suppliers to terminate purchasing relationships with China.
GM initially issued the directive to some suppliers in late 2024, but the effort became more urgent as the U.S.-China trade war escalated this spring, Reuters reported.