A recent report revealed that Tesla is currently considering importing its vehicles from its China factory to the US. However, the company has to make sure that the China-made vehicles are compliant with US auto regulations before the import starts.
The publication wrote, “Tesla is considering exporting made-in-China electric cars to the United States, two people with knowledge of the planning told Reuters, a reversal that would reflect the automaker’s deepening cost advantage at its Shanghai plant and slower demand from Chinese consumers.” When first announcing plans to build cars in China, CEO Elon Musk clearly stated that it would only be to satisfy local demand and that Tesla wouldn’t export vehicles from China. That changed after Gigafactory Shanghai quickly surged to become Tesla’s most productive plant and the world’s largest electric vehicle factory.
While all the considerations appear to be sensible. There is another point of view the automaker would potentially be considering. Automakers in the US are considering EV tax credits and pushing local manufacturing. In this aspect, importing vehicles might not be an ideal option to compete with other automakers. Until recently, Tesla had been selling or shipping for export every vehicle it could produce in Shanghai, but inventory levels rose by their largest margin ever in October, according to data from brokerage CMBI.
Global sales
The Shanghai plant makes Model 3 sedans and Model Y crossovers to sell in China and for export to markets including Europe, Australia, and South East Asia. In addition, factors including a cheaper yuan against the U.S. dollar, lower raw material 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, the people with knowledge of the plans said.
If enacted, the plan could create new complexity for U.S. buyers. Under the terms of a new electric-vehicle subsidy and production-incentive plan signed into law by U.S. President Joe Biden, the incentive available for an individual vehicle could vary depending on whether it was imported. Tesla has been widely seen as one of the major beneficiaries of 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. Tesla’s strategy has been to build the cars it sells in North America at its plants in Fremont, California, and Austin, Texas.
