Tesla's Turn Asks Suppliers To Remove All Components Made In China

Tesla electric car. (Photo: Tesla)

JAKARTA Tesla has reportedly taken new steps in its supply chain strategy by asking suppliers to stop using Chinese-made components for cars manufactured in the United States.

This instruction will be implemented and is targeted to be fully completed in the next one to two years. As reported by The Drive, Tuesday, November 18.

The policy comes amid increasing geopolitical tensions as well as changing tariff rules between the US and China which are considered to affect the cost structure and price strategy of electric vehicles.

Tesla is said to have started switching a number of important components to suppliers from other countries and continues to expand procurement in North America. One of the most affected components is the lithium-iron-phosphate (LFP) battery.

So far, these batteries have been supplied a lot by manufacturers from China. However, changes in the regulation of incentives for electric vehicles in the US make LFP batteries made in China no longer eligible, other than being subject to additional tariffs.

To overcome this, Tesla targets to start producing LFP batteries at its facilities in Nevada in the first quarter of 2026. Instructions to avoid Chinese production components apply to all Tesla plants in the US, including facilities in Fremont, California, and Austin, Texas.

This step was taken to ensure that all models produced in America meet the latest tariff and incentive provisions imposed by the local government. A number of other major automotive manufacturers are also said to have taken similar approaches by directing suppliers to look for alternatives other than Chinese-made products.

This strategy can be seen as an industry effort to reduce dependence on one supplier country and strengthen supply chain independence in the midst of global dynamics. Previously there were General Motors (GM) who did the same.

The request to stop the use of components from China was conveyed by GM to several suppliers by the end of 2024. The automotive manufacturer from the United States then set an initial target of removing all content from China from vehicles manufactured in North America starting in early 2027.