Tesla’s Full Self Driving capability is made possible by a custom-designed computer chip incorporated into its Autopilot ECU or engine control unit. Tesla’s new cutting-edge neural network chips, which are a critical piece of Autopilot 3.0, are being made by Samsung in Austin, Texas, according to TechCrunch.
In fact, 75% of the value of the company’s new computer, which Tesla calls the brain that makes its newly released Autopilot 3 possible, is sourced from outside China. But because it is assembled by Quanta Computer in Shanghai, it is subject to a 25% retaliatory tariff imposed by the Trump maladministration to punish the Chinese for selling too much stuff to Americans. Quanta Computer is a big deal in the tech world. It manufactures components for Apple, Amazon, and Verizon.
Earlier this year, Tesla applied for an exemption from the tariff. “The imposed tariffs are forcing us to either source a new supplier, pass the cost increase to the end customer, or reduce operational costs within our internal operations, all having a reverse impact for what [we believe] to be the intention of the tariff,” Tesla wrote in its application for relief. Here’s more from the company’s application:
“Tesla’s decision to begin production [of the new Autopilot computer took] six months from development to production. With condensed timelines such as this, there is no leeway to test out a supplier that does not already have considerable experience. … Choosing any other supplier would have delayed the program by 18 months with clean room setup, line validation, and staff training.
“Tesla was unable to find a [U.S.] manufacturer with the requisite expertise to produce the Autopilot ECU 3.0 with the required specifications, at the volume requested and under the timelines necessary for Tesla’s continued growth.
“Tesla’s leadership position is contingent on our ability to deploy these advancements and components at volume, which we would be unable to do under the current tariff structure. These tariffs detract from our continuous growth and sustainability in a very difficult industry.
“The imposed tariffs are forcing us to either source a new supplier, pass the cost increase to the end customer, or reduce operational costs within our internal operations, all having a reverse impact for what [we believe] to be the intention of the tariff.
“Sourcing a new supplier increases the risk of poor part quality leading to possible quality issues that would impact the safety of our vehicles and the final product… We cannot risk our customers’ lives due to a defect from a supplier.”
The Trump administration was having none of it, however. It has just come to light that the application for a waiver was denied last March, shortly after it was filed. In a letter to the company, the general counsel for the US Trade Representative informed Tesla the exemption was denied because it “concerns a product strategically important or related to ‘Made in China 2025’ or other Chinese industrial programs.” The USTR also rejected a retroactive exemption request for legacy Autopilot 2.5 hardware, for the same reason.
“Made In China 2025” is China’s strategic plan to produce more high-value goods, particularly in the areas of artificial intelligence, electric vehicles, and robotics. The White House sees the effort as a direct threat to U.S. domestic technology and automotive companies.
So, while Apple, Amazon, and Verizon are allowed to continue their relationship with Quanta Computer, Tesla — which probably produces automobiles with the highest amount of American content of any manufacturer — is forced to bear the brunt of the administration’s vendetta against the Chinese. Yeah, that seems fair.
So, while the short sellers and naysayers are screaming about Tesla’s inability to bring a $35,000 car to market, the US government is making it harder to do so. Sure, Tesla could sell a decontented version with cloth seats, rubber floor mats, and crank-down windows with no electronic driver aids, but that would fly in the face of Tesla’s stated mission to build world-class electric cars that are among the safest vehicles available.
None of that carries any weight with the Trumpies, however, who are committed to sticking it to the Chinese to please their boss. Oh, and don’t think for a minute that giving Elon a poke in the eye at the same time doesn’t please certain legacy automakers who happen to dole out plenty of campaign cash come election time.
As usual, Tesla takes it all in stride and keeps moving ahead, knocking down all obstacles in its path. But it would be nice if the government wasn’t responsible for creating some of those obstacles. There are two things you can do about it. One, buy a Tesla. Two, refuse to vote for shithole politicians.
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