is considering exporting China-made electric vehicles to the U.S., two people with knowledge of the plan told Reuters, a reversal that would reflect the automaker’s deepening cost advantage at its Shanghai plant and the growing appetite of Chinese consumers. Demand slows.

has been studying whether parts made by its Chinese suppliers comply with local North American regulations, and if so, could ship its China-made Model Y and Model 3 vehicles there for sale as soon as next year, people familiar with the matter said. , who declined to be named as the matter is private.

It could also open a channel for exports to Canada, one of the people said.

did not immediately respond to a request for comment.

Tesla’s Shanghai Gigafactory was upgraded earlier this year to produce 1.1 million electric vehicles a year, making it Tesla’s most productive manufacturing center.

The Shanghai plant makes Model 3 sedans and Model Y crossovers, which are sold in China and exported to markets including Europe, Australia and Southeast Asia.

Until recently, had been selling or shipping every car it made in Shanghai for export, but October saw its biggest ever increase in inventory levels, according to brokerage CMBI.

In addition, the combination of a weaker yuan against the U.S. dollar, lower prices for raw materials in China and higher prices for and new cars in the U.S. combine to make Chinese exports to the U.S. potentially cost-competitive, Zhitu said.

The plan, if passed, could introduce new complications for U.S. buyers. Under the terms of a new electric vehicle subsidy and production incentive program signed into law by U.S. President Joe Biden, the incentives available for an individual vehicle could vary depending on whether it was imported or not.

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It could also be politically controversial. is widely seen as one of the main beneficiaries of the Biden administration’s Inflation Reduction Act (IRA), which offers rebates of up to $7,500 (nearly 600,000 rupees) on electric vehicle purchases as part of an effort to boost auto manufacturing Businesses rely on China as part of the law to reduce their costs.

Chief Financial Officer Zachary Kirkhorn told investors last month that the automaker was “very well positioned to take a significant share of the incentives IRAs provide for electric vehicles and energy storage batteries.”

So far, Tesla’s strategy has been to build the cars it sells in North America at its factories in Fremont, California and Austin, Texas.

The California plant, Tesla’s first, produces the Model S, Model three sedans, and Model X and Model Y crossovers. The Texas factory, which opened earlier this year, makes the Model Y and will build Tesla’s upcoming Cybertruck.

also ramped up production at a factory it opened in Berlin earlier this year. Production at the Berlin plant will reduce demand for some of China’s exports, one of the sources said.

Meanwhile, the price gap between vehicles sold in China and the U.S. has been widening, reflecting higher U.S. prices and new discounts in China.

In China, CMBI analysts warned of a looming “price war”, with last month slashing starting prices for the Model 3 and Model Y in China by 9%.

On Monday, it offered additional discounts to buyers who pick up their deliveries this month and purchase insurance from Tesla’s partners.

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Tesla’s Model Y is priced at the equivalent of $49,344 (nearly Rs 3 million) in China and $65,990 (nearly Rs 5.3 million) in the US. Chinese-made cars face 27.5 percent U.S. tariffs, while light trucks face 25 percent.

China, the world’s largest auto market, imposes a 15% tariff on imported cars.

In 2018, before Tesla’s Shanghai factory was up and running, CEO Elon Musk asked then-President Donald Trump to raise tariffs on cars imported from China into the U.S. to make both sides equal and “equal.” “of “fair outcome”. Moderate” tariffs.

Tesla won’t be the first U.S. automaker to ship cars made in China to the U.S. General Motors, which imports the Buick Envision SUV, has unsuccessfully applied for an exemption from the 25 percent U.S. tariffs imposed by the Trump administration.

© Thomson Reuters 2022

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By Rebecca French

Rebecca French writes books about Technology and smartwatches. Her books have received starred reviews in Technology Shout, Publishers Weekly, Library Journal, and Booklist. She is a New York Times and a USA Today Bestseller...