Zinger Key Points
- Tesla is considering exporting vehicles from China to the United States.
- One wrinkle in the plan could be the Inflation Reduction Act's stipulations for EVs.
Electric vehicle leader Tesla Inc TSLA is well-known for its gigafactories around the world that have helped boost production and delivery figures. The company could have a new plan to support demand and help with costs.
What Happened: Already one of the biggest players in the Chinese electric vehicle market, Tesla could soon use this to its advantage in other countries.
Tesla is considering exporting vehicles made in China to the United States, which could take advantage of cost advantages, according to a report from Reuters.
The company is looking into if its Model Y and Model 3 cars made in China would be compliant with North American regulations.
If Tesla does export cars from China, it could ship them to the United States and Canada, two countries seeing increasing demand for electric vehicles.
Tesla builds vehicles in North America at factories in California and Texas.
The report says the Tesla Model Y sells for $65,990 in the United States and has a price tag of $49,344 based on the current exchange rate. There are tariffs imposed based on imports for vehicles in several countries.
UPDATE: Since the story was published, Tesla CEO Elon Musk has said the Reuters report is false. Musk reponded to the Reuters tweet on the news and also said a new Twitter feature could help with news shared in the future.
"When @communitynotes rolls out worldwide, it will have a powerful impact on falsehoods," Musk said.
Related Link: Tesla Q3 Earnings Highlights: Record Revenue, Operating Margin And Free Cash Flow
Why It’s Important: Tesla’s Shanghai Gigafactory has the capacity to make 1.1 million vehicles per year, which makes it the largest manufacturing facility by units for the company.
The Shanghai Gigafactory makes the Model 3 and Model Y vehicles and sells them in China along with exportsto nearby regions like Australia, Southeast Asia and parts of Europe.
The report cites lower material prices and a cheaper yuan in China providing potential cost benefits in making the move.
One wrinkle in the mix will be if the exported vehicles meet criteria to qualify for certain tax benefits in the United States. The Inflation Reduction Act provides rebates of up to $7,500 for each electric vehicle, but requires certain criteria like final assembly in North America.
The Inflation Reduction Act was done in part to help consumers and fight off competition from overseas auto companies, which could put Tesla further at odds with the U.S. government.
Tesla has lowered prices on vehicles in China and has seen increasing competition in the market, which could hurt demand.
General Motors Company GM previously shipped its Buick Envision SUVs made in China back to the Unites States and petitioned for an exemption to 25% tariffs by the U.S., according to the report.
TSLA Price Action: Tesla shares are flat at $190.84 on Friday.
Photo via Shutterstock.
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