Tesla has instructed its suppliers not to use components made in China in the production of its vehicles.
Tensions between the US and China have caused significant disruptions across many industries, forcing companies to seek stable supply chains. Tesla is now asking its American suppliers not to use Chinese-made parts for vehicles manufactured in the US.
Tesla has reportedly already replaced some Chinese-made components in its cars and plans to phase out the rest over the next year or two.
One reason for these changes is uncertainty surrounding tariffs and trade policy between the US and China. Secondly, Tesla is trying to strengthen and stabilize its supply chain after experiencing disruptions due to the pandemic. Finally, tensions between Washington and Beijing are forcing companies to «de-risk» by reducing their dependence on China.
Panasonic Energy, one of Tesla’s battery suppliers, is believed to have made it its «No. 1 priority» to reduce its reliance on China for battery production in the US.
Other major automakers, such as General Motors, have issued similar instructions to their suppliers. General Motors has reportedly asked thousands of its suppliers to stop purchasing from China and plans to sever many of these ties by 2027.
However, some vehicle components are particularly difficult to replace. For example, Chinese companies dominate the production of battery materials. Tesla’s suppliers will have to find alternatives to lithium-ion battery materials, printed circuit boards, and electronic control units.