Tesla mulls exporting China-made EVs to U.S., Canada: sources

Article content

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.

Article content

We apologize, but this video has failed to load.

Tesla mulls exporting China-made EVs to U.S., Canada: sources Back to video

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

That 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’s release replied “False” without elaborating.

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

Article content

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.

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.

The plan, if enacted, 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.

Article content

It could also be politically contentious. Tesla has been widely seen as one of major beneficiaries of the Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to US$7,500 on EV purchases as part of a law intended to push automakers to reduce their reliance on China.

Until now, Tesla’s strategy has been to build the cars it sells in North America at its plants in Fremont, California, and Austin, Texas. The California plant, Tesla’s first, produces the Model S, the Model 3 sedans, and the Model X and Model Y crossovers. The Texas plant, which opened earlier this year, makes the Model Y and will produce Tesla’s upcoming Cybertruck.

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

Tesla would not be the first U.S. automaker to ship made-in-China vehicles to the United States. General Motors has imported the Buick Envision SUV and unsuccessfully petitioned for an exemption to 25-per-cent U.S. tariffs imposed by the Trump administration.