Exclusive: Tesla plans to export Chinese-made electric vehicles to US sources

Exclusive: Tesla plans to export Chinese-made electric vehicles to US sources

SHANGHAI, Nov 11 (Reuters) – Tesla (TSLA.O) is considering exporting Chinese-made electric cars to the United States, two people with knowledge of the planning told Reuters, a reversal that would reflect the growing cost advantage automaker at its Shanghai plant and slowing demand from Chinese consumers.

Tesla has been investigating whether parts made by its China-based suppliers comply with local regulations in North America, and if they do, could ship Chinese-made Model Y and Model 3 cars there as early as next year, said the people. , who declined to be named as the matter is private.

It could also open a channel for exports to Canada, one of the people said.

Tesla did not immediately respond to a request for comment, but Musk in a Twitter post after the story was published replied “False” without giving further details.

Tesla’s Gigafactory in Shanghai has the capacity to produce 1.1 million electric vehicles a year after an upgrade earlier this year, making it Tesla’s most productive manufacturing center.

The Shanghai plant manufactures Model 3 sedans and Model Y crossovers for sale in China and for export to markets including Europe, Australia and Southeast Asia.

Until recently, Tesla was selling or exporting every vehicle it could produce in Shanghai, but inventory levels rose by their biggest ever margin in October, according to data from brokerage firm CMBI. .

In addition, factors such as a cheaper yuan against the US dollar, falling commodity prices in China, and rising prices for Tesla and new cars in the US have combined to make exports of China to the United States potentially competitive, people with knowledge of the so-called plans.

The plan, if adopted, could create new complexity for US buyers. Under the terms of a new electric vehicle production subsidy and incentive plan signed into law by US President Joe Biden, the incentive available to an individual vehicle could vary depending on whether it was imported or not.

It could also be politically controversial. Tesla has been widely seen as a major beneficiary of the Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to $7,500 on electric vehicle purchases in the part of a law aimed at pushing automakers to reduce their dependence on China.

Tesla chief financial officer Zachary Kirkhorn told investors last month that the automaker was “very well positioned to capture a significant chunk” of the incentives offered under the IRA for electric vehicles and batteries for the energy storage.

Until now, Tesla’s strategy has been to build the cars it sells in North America at its factories in Fremont, California, and Austin, Texas.

The California plant, Tesla’s first, produces the Model S, Model 3 sedans, and the Model X and Model Y crossovers. The Texas plant, which opened earlier this year, manufactures the Model Y and will produce Tesla’s next Cybertruck.

Tesla is also ramping up production at a factory it opened in Berlin earlier this year. Production from the Berlin plant will reduce the need for some exports from China, one of the sources said.

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

Reuters Charts

In China, where CMBI analysts have warned of a coming “price war”, Tesla cut China Model 3 and Model Y starter prices by 9% last month.

On Monday, he offered an additional discount to buyers who take delivery this month and purchase insurance from one of Tesla’s partners.

Tesla is selling the Model Y for the equivalent of $49,344 in China, compared to a US price of $65,990. Cars made in China are subject to a 27.5% US tariff, while light trucks are subject to a 25% tariff.

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

In 2018, before Tesla’s Shanghai factory was operational, Chief Executive Elon Musk asked then-President Donald Trump to raise tariffs on cars imported from China into the United States in order to achieve “a fair result” where both parties had equal rights and “also ‘moderate’ tariffs.

Tesla would not be the first American automaker to ship Chinese-made vehicles to the United States. General Motors (GM.N) imported the Buick Envision SUV and unsuccessfully sought an exemption from the 25% US tariffs imposed by the Trump administration.

($1 = 7.2511 Chinese yuan renminbi)

Reporting by Zhang Yan, Brenda Goh; Written by Kevin Krolicki; Editing by Anna Driver

Our standards: The Thomson Reuters Trust Principles.

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