Tesla mulls exporting China-made EVs to United States

Tesla is considering exporting Chinese-made electric vehicles to the United States

Tesla is considering exporting Chinese-made electric cars to the US United Statestwo people with knowledge of the plan told Reuters, a reversal that would reflect the automaker’s deepening cost advantage at its Shanghai plant and slower demand from Chinese consumers.

Tesla has investigated whether parts manufactured by its China-based suppliers comply with local regulations North Americaand if so, it could ship Chinese-made Model Y and Model 3 cars there for sale as early as next year, said the people, who declined to be named because the matter is private.

One of the people said it could also open a channel for exports to Canada.

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Tesla didn’t immediately respond to a request for comment, however musk, in a Twitter post after the story went public, replied “False” without elaborating. Tesla’s Shanghai Gigafactory has the capacity to produce 1.1 million electric vehicles a year after a modernization earlier this year, making it Tesla’s most productive manufacturing hub.

The Shanghai plant makes Model 3 sedans and Model Y crossovers for sale China and export to markets such as Europe, Australia and Southeast Asia.

Until recently, Tesla had sold or shipped every vehicle it could produce in Shanghai for export, but inventories rose at an all-time high in October, according to data from brokerage firm CMBI.

Additionally, factors such as a cheaper yuan against the US dollar, lower commodity prices in China, and the rise in Tesla and new car prices in the United States have combined to make exports from China to the United States potentially cost-competitive to people with knowledge of the plans said.

The plan, if implemented, could create new complexities for US buyers. Under the terms of a new electric vehicle subsidy and production stimulus plan signed by the US President Joe Bidenthe incentive available for an individual vehicle could vary depending on whether it was imported.

It could also be politically controversial. Tesla has been widely recognized as one of the main beneficiaries of the biden The US government’s Inflation Reduction Act (IRA), which provides rebates of up to $7,500 on electric vehicle purchases as part of a law designed to encourage automakers to reduce their reliance on China.

Tesla Chief Financial Officer Zachary Kirkhorn told investors last month the automaker is “very well positioned to get a significant share” of the incentives being offered under the IRA for electric vehicles and batteries for energy storage.

So far, 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 3 sedans, and 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 ramping up production at a plant it opened in Berlin earlier this year. According to one of the sources, production from the Berlin plant will reduce the need for some exports from China.

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

In China, where CMBI analysts have warned of an impending “price war,” Tesla slashed entry-level prices for its Model 3 and Model Y in China by as much as 9 percent last month.

It offered an additional discount for buyers who took delivery this month and took out insurance with one of Tesla’s partners.

Tesla sells the Model Y in China for the equivalent of $49,344 compared to the US price of $65,990. Chinese-made cars are subject to a US tariff of 27.5 percent, while light trucks are subject to a 25 percent tariff.

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

In 2018, before Tesla’s Shanghai plant was operational, Chief Executive Elon Musk asked the then President donald trump Raising tariffs on cars imported into the United States from China to achieve “a fair outcome” where both sides have equivalent and “equal” tariffs.

Tesla wouldn’t be the first US automaker to ship Chinese-made vehicles to the United States. General Motors imported the Buick Envision SUV and unsuccessfully applied for an exemption from the 25 percent US tariff Trump card Administration.