China and Taiwan are major global producers of essential electronics parts and components.
Tesla has requested that its suppliers move the production of components and parts outside of China and Taiwan by early next year, citing increasing geopolitical uncertainties. This strategy aims to diversify supply sources for markets outside China, ensuring stable supply chain operations amid rising geopolitical risks in the region, particularly with the upcoming U.S. presidential election.
China and Taiwan are central to global electronics manufacturing, producing key parts such as displays, printed circuit boards, camera lenses, and semiconductors. While American automakers like General Motors and Ford have also considered relocating electronics production, they have not made formal requests like Tesla.
The timing of Tesla’s directive aligns with heightened tensions, marked by the U.S. increasing tariffs on Chinese electric vehicles and the election of Taiwan’s new president, Lai Ching-te, on May 20. In response, Tesla has remained silent, whereas Ford emphasized its ongoing efforts to develop a resilient and competitive supply chain, although GM declined to comment.
Tesla’s proactive steps also reflect the competitive pressure from Chinese EV manufacturers, as indicated by Counterpoint Research’s data showing that BYD’s global market share for battery electric vehicles (BEVs) rose to 15% in the first quarter of 2024, while Tesla’s share fell from 22% to 19% year-over-year.
Despite these shifts, Tesla continues to engage closely with China, as evidenced by CEO Elon Musk’s recent trip to the country in April, aiming to secure approval for Tesla’s advanced driver-assist software, FSD, in the Chinese market.
