Tesla has thought about exporting electric automobiles built in China to the US and Canada.
According to two people with knowledge of the planning, Tesla has considered plans to export made-in-China electric vehicles to the United States and Canada. This would connect Tesla’s largest factory to North America, its largest market.
According to the people who declined to be identified because the process was private, Tesla has been assessing whether electric cars built at Shanghai’s Gigafactory may be sold in North America as early as next year.
Tesla’s Chinese suppliers
According to them, Tesla’s research took into account whether parts produced by Tesla’s Chinese suppliers would be consistent with laws in the US and Canada.
According to one of the sources, the Shanghai facility has been working on a preliminary plan for a small-batch test run of vehicle manufacturing in the first quarter of 2023 that would be in compliance with North American norms for prospective export.
Elon Musk, the CEO of Tesla, simply wrote “False” on Twitter after Reuters published their piece on Friday. When contacted by Reuters, Tesla’s Austin, Texas-based representatives declined to comment or elaborate on Musk’s statement. A screenshot of Musk’s denial was provided in response by a Tesla representative in China.
Reuters was unable to ascertain how Musk’s remark would influence either the execution of the plan or the feasibility study Tesla had started on shipments from China to the United States and Canada.
According to the individuals who talked with Reuters and a memo outlining some of the procedures being taken by the Shanghai factory to test its readiness by early 2023, the evaluation of prospective shipments to North America from Shanghai had been evolving as recently as the previous two weeks.
Tesla wouldn’t be the first American carmaker to import vehicles from China. General Motors imported the Buick Envision SUV and unsuccessfully requested a waiver from the 25% Trump administration U.S. tariffs.
Shanghai Gigafactory of Tesla
The automobiles that Tesla sells in North America are now built at its plants in Fremont, California, and Austin, Texas. After an upgrade earlier this year, the Shanghai Gigafactory of Tesla can now build 1.1 million electric vehicles annually, making it the company’s most productive production facility.
Model 3 sedans and Model Y crossovers are produced in Shanghai for domestic consumption as well as export to regions including Europe, Australia, and Southeast Asia.
Tesla had been selling or exporting every vehicle it could make in Shanghai up until recently, but according to statistics from brokerage CMBI, inventory levels increased in October by the greatest margin ever.
The yuan’s depreciation against the dollar, China’s lower raw material costs, and the growth in Tesla and new-car pricing in the US have all conspired to potentially cut the cost of exports from China to the US, according to the people with knowledge of the plans.
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If the U.S. portion of the export strategy is put into effect, Tesla consumers may experience additional difficulty. According to the terms of a new subsidy and production incentive plan for electric vehicles signed into law by U.S. President Joe Biden, the incentive offered for a specific vehicle may differ depending on whether it was imported, according to analysts.
The Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to $7,500 on EV purchases as part of a law intended to push automakers to reduce their reliance on China, has been widely viewed as one of the major beneficiaries. Tesla has been one of the major beneficiaries of the IRA.
In a file with the Ontario government in July, Tesla stated that it was collaborating with local officials to establish “an advanced manufacturing plant” in Canada.
Additionally, Tesla is stepping up production at a facility it constructed earlier this year in Berlin. One of the sources claimed that the plant’s output will lessen the requirement for some Chinese exports.
Tesla reduced the starting pricing for the Model 3 and Model Y in China by as much as 9% last month, despite predictions by CMBI analysts of an impending “price war” in the country.
For customers who take delivery this month and get insurance from one of Tesla’s partners, company provided an extra refund on Monday.
In China, Tesla sells the Model Y for the equivalent of $49,344 as opposed to $65,990 in the United States. Light-duty vehicles are subject to a 25% levy while cars built in China are subject to a 27.5% tariff.
The largest auto market in the world, China, levies a 15% duty on imported cars.
Before Tesla’s Shanghai facility began producing cars, Musk pushed then-President Donald Trump to increase tariffs in order to “get a fair outcome” where both sides had equivalent and “equally modest” duties on cars imported to the United States from China.