Can Tesla abandon Chinese parts within two years?

The trade war between China and the United States is like Louis XVI, with no end in sight.

Chuanzi has just signed a one-year ceasefire agreement with us, but American car companies have come under pressure again.

A few days ago, The Wall Street Journal reported that Tesla is likely to no longer use Chinese made components to manufacture domestic cars in the United States within the next one to two years. Some domestic companies are expected to face another wave of gank.

No, Lao Ma, what do you want? Are you eating Chinese food here and going back to smash our bowls?

To be honest, he really can’t control this matter. In May of this year, Trump stated that American car manufacturers must complete all production of vehicles and components domestically in the United States, otherwise it will be subject to various tariffs.

To put it simply, behind the scenes, it was Kawako who was secretly poking and causing trouble.

His goal, of course, is the return of manufacturing and the phrase ‘Make America Great Again’. Since I am unable to reduce the cost of the US supply chain, I will have to make the cost of importing from China even higher.

So in order to avoid risks, almost all American car companies are actively “de Sinicizing”. Earlier, Reuters reported that General Motors was preparing to abandon its supply chain in China.

Although in formal settings, General Motors has been hesitant and has not responded directly, there are reports that it has been making similar demands on suppliers since 2024.

The “de Sinicization” strategy of American car companies such as Tesla and General Motors is not a recent decision, but has been happening in the past.

The reason is the long-standing policy of the United States. For example, in 2023, the “Inflation Reduction Act” introduced by the United States directly included a ban on our battery products.

The bill explicitly requires that the battery components and key minerals (such as lithium, nickel, cobalt, graphite) used by American car companies cannot contain ingredients from Chinese, Russian, North Korean, Iranian, and other companies, otherwise they will not receive the $7500 tax reduction.

Not to mention why these countries are grouped together, the key is that you are referring to a large circle of countries, and among them, we are not the only ones who can sell power batteries to the United States? So the purpose of this thing is to make American car companies give up on Chinese batteries.

So under policy pressure, Tesla abandoned CATL in North America and completely turned to Panasonic and LG.

However, in order to completely eliminate Chinese parts from American car companies, these bills are just a prelude, and Chuanzi is preparing to use tariffs to create a miracle.

In March of this year, Trump signed an executive order to impose a 25% tariff (232 tariff) on all imported cars and parts, directly increasing the cost of the American made Model Y by about $10000.

Even he threatened to increase it to 50% if the industry is not further transferred to the United States.

To be honest, this is a bit excessive. In the end, don’t the costs have to be added to the people?

However, what I didn’t expect was that many European car companies were the first to become anxious about this matter, because this wave is not only about us and the United States, but also Europe has been equally sanctioned. For example, Ferrari imported from Italy by the United States immediately announced a 10% price increase due to tariff costs.

I can only say that Kawako is still kind and treats things well, not people. In short, despite the global condemnation, tariffs were still implemented.

But Americans are still kind-hearted, and in the end, they even opened a loophole. As long as you produce in the North American Free Trade Zone (the United States, Canada, Mexico), it is still considered “domestic”. Some Chinese suppliers continue to export their products to American car companies through Mexico.

However, there is a prerequisite for this matter, which is that when you have experience in Mexico or Canada, you need to build a factory locally, and this value-added part should account for at least 75% of the total product value. At least, the core technology of domestic suppliers has not leaked, and money can still be earned.

However, at this point, Chuanzi began to realize that something was wrong again. Domestic cars had been raising prices for the whole day, and in the end, Mexico had become fat? So in order to prevent us from continuing to “disguise” as local products from other countries to enter the US market, the “transit trade” will become increasingly tight.

For various car companies, there is only one path left: completely abandoning Chinese suppliers.

But this is ultimately a lose lose situation, as car companies have no incentive to continue implementing it. At the beginning, everyone was also in a dilemma.

And now these car companies are suddenly accelerating their pace and being exposed by major media, mainly due to the recent rare earth and Anshi incidents, which have made them increasingly worried about the supply of parts being cut off.

Both of these things should be clear to everyone. Whether it’s our proactive tightening of regulation or sudden international disputes, facing the irreplaceability of Chinese suppliers in key areas, American and European car companies are somewhat panicked.

So, everyone is trying to find ways to deal with it. Not only are American car companies such as Tesla and General Motors preparing to “decouple” from the Chinese supply chain, but European car companies such as BMW, Volkswagen, Mercedes Benz, and Steellantis have also announced their intention to break away from the Chinese supply chain.

This is not a good thing, but some of our netizens may be a bit too stressed about it.

For example, many people online have started to worry about whether the stocks of related suppliers will hit the limit down when they see this news, and they are not very optimistic about the future of our automotive industry.

I think there’s no need for everyone to be too pessimistic.

Firstly, this matter is not directly related to us. In the above-mentioned news drafts, the emphasis is particularly on “American made cars”, which indicates that changing suppliers will only happen in the United States, and domestically produced American cars are still our own parts.

There is no problem of Tesla’s price rising or inability to buy Ningde batteries in the future. The cooperation between General Motors and SAIC is also proceeding according to the original plan, let alone SAIC GM Wuling…

For domestic suppliers, although they may be affected to some extent, overseas car companies may not be able to quickly complete the replacement.

For example, in strategic industries such as rare earths, it’s not a matter of whether you want them or not. Whether we give them or not is another matter. In fact, it is very difficult for international car companies to completely decouple from Chinese suppliers.

Take Tesla as an example, currently 100% of the models sold in the United States are produced by North American factories, but about 50% of the parts are still related to China. If it could replace it, it would have replaced it long ago. Can it wait until today?

Tesla’s thermal management system mainly comes from Sanhua Intelligent Control. Although it competes with international giants such as Faurecia and Denso, Sanhua is absolutely leading in thermal management integrated components and is difficult to replace.

In addition, there are also 9800 ton die-casting products from Topu Group, as well as sunroofs, windshields, and other products from Fuyao Glass. These companies’ products can achieve a price reduction of over 30% compared to their European and American competitors.

If you insist on smoothing out all 50% of the price, the price of American cars will rise significantly. At that time, wouldn’t it be better for us to directly export the four-wheel old man’s car?

So it’s hard to say to what extent this wave of decoupling will reach in two years.

After all, those with discerning eyes should be able to see clearly who is avoiding competition and who is embracing it.