Amid increasing geopolitical tensions and tariff disputes between the U.S. and China, Tesla (TSLA) is striving to remove Chinese-made components from its U.S.-manufactured cars, the Wall Street Journal reported on Saturday.
The electric vehicle maker is now requiring its suppliers to exclude Chinese parts in the making of its cars in the U.S., after earlier this year deciding to stop using suppliers from the Asian nation, WSJ said, citing people familiar with the situation.
Tesla (TSLA) and its suppliers have already replaced some China-made components with parts made elsewhere and are aiming to switch all other components to those made outside of China in the next year or two, WSJ said, citing some of the people.
Historically reliant on Chinese suppliers, Tesla (TSLA) has actively sought alternatives, encouraging these suppliers to relocate production to regions such as Mexico and Southeast Asia. But this year, due to the steep tariffs on Chinese imports, the Elon Musk-led company accelerated its strategy to cut out Chinese parts, WSJ said, citing the people.
One significant challenge remains in the transition of lithium-iron phosphate batteries, traditionally sourced from China’s CATL (OTC:CTATF)(OTC:CYATY), but recently halted due to tariff challenges and tax credit ineligibility for Chinese-made products.
Tesla (TSLA) stock fell -5.9% this week amid a larger tech selloff, even as Wall Street managed to eke out a gain.