Tesla is inlcuded in the list of U.S. companies that want their Chinese-made products or components to be excluded from the recently imposed 25 percent tariffs by the U.S. gonvernment.
The electric car maker has asked the Trump administration to exempt the Chinese-made car computer “brain” of its new Model 3 sedan from tariffs imposed in August, saying they threaten the electric carmaker’s bottom line.
“Increased tariffs on this particular part cause economic harm to Tesla, through the increase of costs and impact to profitability,” the company said in a request for tariff relief from the government, according to Reuters.
Tesla said it had been unable to find another manufacturer for the computer that is powering the autopilot and other features of the Model 3 vehicle, and that “choosing any other supplier would have delayed the (Model 3) program by 18 months with clean room setup, line validation, and staff training.”
A new supplier “substantially increases the risk of poor part quality that could lead overall vehicle quality issues that would impact the safety of our vehicles and the consumer acceptance of the final product,” Tesla added.
The Trump administration has imposed 25 percent tariffs on a total of $50 billion in annual Chinese exports and 10 percent tariffs on an additional $200 billion in Chinese exports. The tariffs were in response to what the Trump administration calls China’s unfair trade practices.
On Dec. 21, 2018, the Office of the U.S. Trade Representative released a Federal Register Notice to modify the Harmonized Tariff Schedule in order to grant nearly 1,000 product exclusion requests from tariffs that went into effect on July 6 on imports from China. The USTR plans to release information on additional decisions on product exclusion requests in the future. To view the updated index of product exclusions requests, click here.
Tesla appears in the list of inquiries, along with other car makes including No. 1 U.S. automaker General Motors Co., Nissan Motor Co and Fiat Chrysler Automobiles NV.
According to the USTR's document, Tesla's request is on "Stage 2", which denotes that they are in the stage where "initial Substantive Review of whether the exclusion request should be granted, based on the substantive criteria set out in the Product Exclusion Notice." Requests that pass the Substantive Review will proceed to Stage 3 for further review "based on consultations with U.S. Customs and Border Protection (CBP)".
Tesla has been aggressively cutting costs as it works to meet production goals for the Model 3, which has become a top-selling luxury sedan on the U.S. market alongside the larger Model S.
Tesla has also started taking orders for Model 3 in Europe and China.