Tesla needs China to survive, but it doesn’t want suppliers to make everything there in case of supply chain snarls: report

  • Tesla doesn’t want its suppliers to make all of their stuff in China and Taiwan, per Nikkei Asia.
  • Supply chain executives said Tesla wanted to avoid disruptions caused by geopolitical uncertainties.
  • Tesla CEO Elon Musk said he didn’t ask President Joe Biden to impose tariffs on Chinese EVs.

Tesla has asked its suppliers to start making their parts outside China and Taiwan, Nikkei Asia reported on Thursday.

The EV giant is looking to diversify its supply chain for non-China markets, the outlet reported, citing six supply chain executives familiar with the matter. The company hopes its request can be fulfilled by its suppliers by as early as next year, the outlet reported.

The executives said Tesla wanted to avoid potential supply chain disruptions due to geopolitical uncertainties in the Greater China region.

Tesla isn’t the only American automaker looking to expand its supply chains.

“We serve several American automobile makers, and Tesla is the most aggressive in terms of trying to avoid the risks surrounding China and Taiwan,” an electronics supplier executive told Nikkei Asia, adding that such a move would be more challenging and expensive.

According to the outlet, General Motors and Ford have raised similar questions to their suppliers, though they did not make an explicit request like Tesla.

Representatives for Tesla, General Motors, and Ford didn’t immediately respond to requests for comment from BI sent outside regular business hours.

Tesla’s supply chain maneuvers may seem peculiar considering how friendly its CEO, Elon Musk, has been with the Chinese authorities.

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The mercurial billionaire made a surprise trip to China last month, where he met Premier Li Qiang, the country’s second-highest-ranking politician.

The trip proved fruitful for Musk, as Chinese officials gave their in-principle approval for Tesla to roll out its Full Self-Driving (FSD) technology in the country, per Bloomberg.

On May 7, the state-owned newspaper China Daily reported that officials had also given their partial support to Musk’s proposal to implement Tesla’s FSD technology in China’s taxi services.

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