The computer that is the heart and soul of the Tesla Model 3 is manufactured in China. That component has been called the “brain of the Model 3” by the company, but it has now become part of the trade war begun by the Trump administration in 2018. It is part of the $50 billion worth of Chinese-made products that were made subject to a 25% tariff last August.
Tesla has filed a request with the federal government to exempt that computer from the tariff scheme, saying, “Increased tariffs on this particular part cause economic harm to Tesla, through the increase of costs and impact to profitability.”
It further claims the tariff will have a negative effect on the company’s bottom line, according to a report by Reuters. If Tesla was forced to find a new supplier, that would not be good since it “substantially increases the risk of poor part quality that could lead [to] overall vehicle quality issues that would impact the safety of our vehicles and the consumer acceptance of the final product,” Tesla added in its request for tariff relief.
The request was included in a post on a government website by the US Trade Representative on December 17. Tesla did not identify the manufacturer of the computer but said it had been unable to find another manufacturer “with the required specifications, at the volume requested and under the timelines necessary for Tesla’s continued growth. Choosing any other supplier would have delayed the (Model 3) program by 18 months with clean room setup, line validation, and staff training.” Tesla declined comment on the story when contacted by Reuters on Friday.
Trade wars are easy to win, Trump boasted at the time the new tariffs were imposed. But as usual, his Ready! Shoot! Aim! policies fail to take into account the salient details that a less anal retentive person without the need for constant self-gratification would take into consideration. How deliciously ironic is it that his attempt to punish China actually causes economic harm to an American company building American-made cars with American workers?
Tesla is not the only automaker petitioning for trade relief. General Motors sought exemptions in July for the Chinese-made Buick Envision, which accounted for 15% of Buick sales in the US in 2018. The General also asked for relief with regard to two dozen parts it sources from Chinese suppliers, including certain transmission bearings. Given Trump’s current hissy fit about GM’s decision to shutter 5 US manufacturing facilities, the chances of GM’s requests being granted are somewhere between slim and none.
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