Tesla is now requiring its suppliers to exclude China-made components in the manufacturing of its cars in the US.
Earlier this year, the electric-vehicle maker decided that it would stop using China-based suppliers for Tesla cars that are made in the US. Tesla and its suppliers have already replaced some China-made components with parts made elsewhere. Tesla is aiming to switch all other components to those made outside of China in the next year or two.
Tesla has been trying to reduce its dependence on China-made components for its US cars ever since the Covid-19 pandemic disrupted the flow of goods from China, and encouraging its China-based suppliers to make components elsewhere including in Mexico. But this year, after President Trump imposed stiff tariffs on Chinese imports, the company accelerated the strategy to cut out Chinese parts.
China is a major producer and exporter of auto parts — including chips and batteries — and materials that go inside cars. Many of them are cheaper due to China’s huge production scale, lower costs and weak currency.
Tesla’s strategy is the latest example of how trade and geopolitical tensions are driving a decoupling of the world’s two largest economies and increasingly redrawing global supply chains. Many American companies are seeking to exclude China-made components or manufacture outside of China when it comes to products for the US market. In turn, Chinese technology companies are erasing American components and technology from their supply chains.
The auto industry has been hit particularly hard by China-US friction because of the global nature of its supply chains and business. This spring, automakers were rattled after China imposed export restrictions on certain rare earths and magnets that are widely used in cars and their production. More recently, carmakers have struggled to secure chips after China blocked the export of semiconductors made by a firm called Nexperia that are used in car lights and electronics.
The US is Tesla’s biggest market, and Tesla vehicles running on American roads are produced at the carmaker’s factories in the US. In China, Tesla produces cars at its Shanghai plant using mostly locally produced components. The Shanghai-made cars are shipped both within China and overseas, mostly to Asia and Europe, but not to the US.
Over the years, Chinese suppliers that Tesla has been working with in China have increasingly been shipping parts globally for the carmaker’s factories elsewhere. Its Shanghai factory had some 400 direct Chinese suppliers, more than 60 of which had supplied Tesla’s global production.
Tesla has been pursuing a strategy of cutting back on made-in-China components for its US cars since Trump’s first administration. As a part of this approach, Tesla has worked with its Chinese suppliers — including those making seat covers and metal casings — to set up factories and warehouses in Mexico and Southeast Asia in recent years.
One Chinese-made component that Tesla is struggling to substitute is the lithium-iron phosphate battery. 
CATL has been a major supplier to Tesla for the battery, known as LFP.
Until last year, Tesla was selling cars in the US with Chinese-produced LFP batteries, but since then it stopped doing so, because they became ineligible for EV-related tax credits and also due to US tariffs.
Tesla is working to build LFP batteries for energy-storage products in the US. In Oct, the company said it expected its facility in Nevada making such battery products to start running in the first quarter of 2026.
Tesla is also working on “securing additional supply chain from non-China-based suppliers.”
“But it will take time.”
wsj.com/business/autos
CATL has been a major supplier to Tesla for the battery, known as LFP.
Until last year, Tesla was selling cars in the US with Chinese-produced LFP batteries, but since then it stopped doing so, because they became ineligible for EV-related tax credits and also due to US tariffs.
Tesla is working to build LFP batteries for energy-storage products in the US. In Oct, the company said it expected its facility in Nevada making such battery products to start running in the first quarter of 2026.
Tesla is also working on “securing additional supply chain from non-China-based suppliers.”
“But it will take time.”
wsj.com/business/autos