Tesla Speeds Up U.S. Supply Chain Shift From China

Tesla, led by Elon Musk, is reportedly accelerating its plan to remove China-made components from vehicles assembled in the U.S. The company has already begun replacing certain parts with alternatives from other regions and aims to complete the transition within the next one to two years.

The move comes after the U.S. increased tariffs on Chinese imports earlier this year, adding uncertainty to long-term cost planning. While China remains a global powerhouse for automotive components—including chips, batteries, and essential raw materials—its large-scale manufacturing and competitive pricing have long been a key advantage for the global EV industry.

However, ongoing tariff fluctuations in the U.S.–China trade tensions have made it difficult for Tesla to maintain stable pricing. Recent friction between China and the Netherlands over chip export controls has also triggered renewed concerns about automotive chip shortages, prompting internal discussions at Tesla about diversifying component sources.

At the same time, Tesla's performance in the Chinese market has softened. According to data from the China Passenger Car Association, sales of China-built Tesla vehicles fell 9.9% year-on-year in October to 61,497 units, reversing the modest 2.8% growth seen in September. Output from the Shanghai Gigafactory—including units shipped to Europe, India, and other markets—slid 32.3% from the previous month.

Tesla isn't the only company taking action. Earlier last week, General Motors also instructed its partners to remove China-origin components from their production lines