Tesla has told its suppliers they need to stop using China-made components in the cars built at U.S. factories. Some parts have already been replaced, and all remaining China-made parts should be swapped out over the next year or two.
Trade friction between the U.S. and China, especially new tariffs and export restrictions on key materials, is a major reason for Tesla’s shift.
Tesla began making these changes during the pandemic when supply chain problems first started to get much worse. But with the U.S. government raising tariffs this year on imported vehicles and parts, Tesla has sped up the switch to suppliers from other regions or the U.S. Some of these changes are hard, like moving away from batteries made by CATL, which is the world’s biggest EV battery maker.
New plans for U.S. factories
Tesla is making more in North America and looks to bring even more production home. The company says a new battery plant in Nevada will start working next year to help replace Chinese lithium iron phosphate batteries. Tesla had to stop selling U.S. cars with these Chinese batteries because they were not allowed under federal EV tax credit rules.
Tesla is not alone in trying to cut China out of the supply chain. General Motors has told its suppliers to get out of China by 2027. Other big automakers are changing their plans in similar ways. Most are worried by shifts in trade policy, rising tariffs, and supply risks tied to rare materials and electronics from China. Apple is also turning to domestic sources for rare earths.
Tesla’s move adds to the industry’s trend toward less reliance on China. It is not easy or cheap. Many suppliers have worked with China for years and now must find new partners. And with high tariffs and trade tension likely to stick around, more companies may speed up similar changes.
These shifts could make supply chains steadier and help U.S. factories rely on local parts in the future and Tesla will likely finish this swap away from Chinese parts by 2027 as reported by The Wall Street Journal.
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