Tesla has considered exporting electric vehicles from Shanghai to the United States and Canada – sources


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SHANGHAI – Tesla has considered exporting Chinese-made electric vehicles to the United States and Canada, two people with knowledge of the planning told Reuters, a step that would link its largest factory to North America, its most big market.

Tesla is evaluating whether Model 3 and Model Y electric vehicles made at Gigafactory Shanghai could be sold in North America as early as next year, according to the people, who declined to be named because the process was confidential.

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Tesla’s assessment included reviewing parts made by Tesla’s Chinese suppliers for compliance with regulations in the United States and Canada, they said.

The Shanghai plant has been working on an initial plan for a trial production of vehicles in small batches in the first quarter of 2023 that would meet North American standards for potential export, one of the people said.

After Reuters published its story on Friday, Tesla Chief Executive Elon Musk in a Twitter post said “False” without giving further details. Contacted by Reuters, representatives for Austin, Texas-based Tesla did not comment or clarify Musk’s remark. A Tesla representative in China responded with a screenshot of Musk’s denial.

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Reuters could not determine whether Musk’s comment would affect the feasibility study Tesla had begun on China’s exports to the United States and Canada, or the implementation of the plan.

The scrutiny of potential exports to North America from Shanghai had grown over the past two weeks, according to people who spoke to Reuters and a memo detailing some of the steps the Shanghai factory is taking to test its readiness by early 2023. which was seen by Reuters.

Tesla would not be the first American automaker to ship Chinese-made vehicles to the United States. General Motors imported the Buick Envision SUV and unsuccessfully sought an exemption from the 25% US tariffs imposed by the Trump administration.

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

Tesla’s Gigafactory in Shanghai has the capacity to produce 1.1 million electric vehicles a year after an upgrade earlier this year, making it Tesla’s most productive manufacturing center.

The Shanghai plant manufactures Model 3 sedans and Model Y crossovers for sale in China and for export to markets including Europe, Australia and Southeast Asia.

Until recently, Tesla was selling or exporting every vehicle it could produce in Shanghai, but inventory levels rose by their biggest ever margin in October, according to data from brokerage firm CMBI. .

In addition, factors such as a cheaper yuan against the US dollar, falling commodity prices in China, and rising prices for Tesla and new cars in the US have combined to make exports of China to the United States potentially competitive, people with knowledge of the so-called plans.

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The U.S. portion of the export plan, if implemented, could create new complexity for Tesla buyers. Under the terms of a new electric vehicle subsidy and production incentive plan signed into law by US President Joe Biden, the incentive available for an individual vehicle could vary depending on whether it was imported or not, said analysts.

Tesla has been widely seen as a major beneficiary of the Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to $7,500 on electric vehicle purchases in the part of a law aimed at pushing automakers to reduce their dependence on China.

Tesla said in a filing with the Ontario government in July that it was working with officials there as part of an effort to establish “a state-of-the-art manufacturing facility” in Canada.

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Tesla is also ramping up production at a factory it opened in Berlin earlier this year. Production from this 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 both higher US prices and new discounts in China. This means that Tesla vehicles could potentially be exported to North America at a competitive price.

In China, where CMBI analysts have warned of a coming “price war,” Tesla slashed Model 3 and Model Y starter prices in China by 9% last month.

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

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Tesla is selling the Model Y for the equivalent of $49,344 in China, compared to a US price of $65,990. Cars made in China are subject to a 27.5% US tariff, while light trucks are subject to a 25% tariff.

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

In 2018, before Tesla’s Shanghai factory operated, Musk asked then-President Donald Trump to raise tariffs on cars imported from China into the United States in order to achieve “a result fair” where both parties had equivalent and “equally moderate” tariffs. . ($1 = 7.2511 Chinese yuan renminbi)

(Reporting by Zhang Yan, Brenda Goh; Writing by Kevin Krolicki; Editing by Anna Driver and Pravin Char)

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