Exclusive: Tesla mulls exporting Chinese-made EVs to the United States—source

SHANGHAI, Nov 11 (Reuters) – Tesla (TSLA.O) considering exporting made-in-China electric cars to the United States, two people with knowledge of the planning told Reuters, the return will reflect the deepening cost advantage of the automaker in the Shanghai factory and slower demand from Chinese customers.

Tesla has been studying whether parts made by China-based suppliers comply with local regulations in North America, and if they do, it may send China-made Model Y and Model 3 cars for sale there as soon as next year, the people said. , who declined to be named because the matter is personal.

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 release of the story 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 for sale in China and for export to markets including Europe, Australia and Southeast Asia.

Until now, Tesla has sold or shipped for export every vehicle it can produce in Shanghai, but the inventory level rose by the largest margin ever in October, according to data from brokerage CMBI.

In addition, factors including the cheaper yuan against the US dollar, lower raw material prices in China and the rise in Tesla and the price of new cars in the United States have combined to make exports from China to the United States potentially detrimental to competition, the people. with knowledge of the said plan.

The plan, if enacted, could create new complications for US buyers. Under the new electric vehicle subsidy and production incentive plan signed by US President Joe Biden, the incentives available to individual vehicles may vary depending on whether they are imported.

It can also be politically controversial. Tesla has been widely seen as one of the main beneficiaries of the Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to $7,500 on EV purchases as part of legislation intended to encourage automakers to reduce their reliance on China.

Tesla Chief Financial Officer Zachary Kirkhorn told investors last month that the automaker is “extremely positioned to capture a significant portion” of the incentives offered in the IRA for EVs and batteries for energy storage.

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

The California factory, Tesla’s first, produced Model S, Model 3 sedans and 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 factory 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.

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

Reuters Graphics

In China, where CMBI analysts have warned of an impending “price war”, Tesla cut the starter prices for the Model 3 and Model Y in China by up to 9% last month.

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

Tesla sells the Model Y for the equivalent of $49,344 in China, compared to the US price of $65,990. Chinese-made cars face US tariffs of 27.5%, while light-duty trucks face 25% tariffs.

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

In 2018, before the Tesla factory in Shanghai was operational, Chief Executive Elon Musk had asked President Donald Trump to raise tariffs on cars imported into the United States from China to achieve a “fair result” where both sides have the equivalent of “equal. moderate tariffs” “.

Tesla won’t be the first US automaker to ship Chinese-made vehicles to the United States. General Motors (GM.N) has imported Buick Envision SUV and unsuccessfully petitioned for exemption from 25% US tariffs imposed by the Trump administration.

($1 = 7.2511 yuan Chinese renminbi)

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

Our standards: Thomson Reuters Trust Principles.

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