Tesla Inc. (NASDAQ: TSLA) has asked its suppliers to exclude Chinese-made parts from US auto production amid rising geopolitical tensions between the US and China.
Tesla, suppliers replace Chinese parts
This was reported by a Wall Street Journal reportthe Elon MuskThe EV giant-led EV decided earlier this year to stop using Chinese suppliers for its US-made cars, according to sources familiar with the matter.
The company and its suppliers have already started replacing some Chinese-made components with parts from other countries.
Supply interruptions, tariffs
The shift is part of Tesla’s broader strategy to reduce dependence on Chinese components, a plan accelerated by tariffs imposed by the president. Trump about Chinese imports. The company aims to switch all remaining components to non-Chinese sources within a year or two.
Trade tensions between the US and China
China’s role as a major producer and exporter of auto parts, including chips and batteries, has been affected by ongoing trade tensions between the US and China.
See also: Tesla Robotaxi Rival Waymo Shares Updated Fleet Size Amid Highway Expansion – Elon Musk Says ‘Rookie Numbers’
Recent disruptions in the supply of automotive chips, due to a dispute between China and the Netherlands, have further pushed Tesla to diversify its supply chain, according to the report.
The company is working to bring on additional non-Chinese suppliers, although challenges remain, especially in lithium iron phosphate batteries.
Tesla’s decision to move away from Chinese-made components for its U.S. vehicles comes against a backdrop of declining sales in China. In October, Tesla’s sales in China fell sharply, down 36% year-on-year.
Moreover, China’s increasing grip on the export of rare earth metals, crucial to many technology industries, further complicates the situation. Since China controls a significant portion of rare earth mining and processing, this move has significant implications for global supply chains, including those of tech giants like Apple Inc. (NASDAQ:AAPL).
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