Tesla rejects 'country-of-origin' ban of Chinese parts suppliers, repudiates media reports

Tesla does not exclude suppliers based on their country of origin as the US electric-vehicle (EV) maker applies unified and rigorous standards in selecting vendors from around the globe, according to a senior official.

Grace Tao, vice-president of the US company, offered a vote of confidence to the more than 400 Chinese manufacturers that supply car components from batteries to heat-control systems to Tesla's Shanghai Gigafactory.

She made the remarks on Wednesday, in what appeared to be an indirect response to media reports suggesting that Chinese-made parts would be excluded from the production of Tesla vehicles in the US.

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"Whether in the US, China, or Europe, Tesla uses the same rigorous and objective standards in selecting suppliers across all its manufacturing sites worldwide," Tao, who is in charge of Tesla's external relations in China, said on social media platform Weibo. "The selections are based on product quality, total cost, technological strength and ability to keep long-term supply."

She added that geographic location was not one of the criteria.

Elon Musk is seen with vice-president Grace Tao and senior vice-president Tom Zhu in Beijing on May 31, 2023. Photo: Reuters alt=Elon Musk is seen with vice-president Grace Tao and senior vice-president Tom Zhu in Beijing on May 31, 2023. Photo: Reuters>

On November 15, The Wall Street Journal reported that Elon Musk's company planned to stop using Chinese-made components in cars assembled in the US as it aimed to reduce reliance on China amid uncertainty over tariffs between the world's two largest economies.

General Motors had taken a similar approach to avoid using Chinese car parts in its US production lines, Reuters reported early this month.

Tao said the 400-odd Chinese suppliers provided more than 95 per cent of all the components in Tesla's Shanghai-made Model 3 and Model Y vehicles.

Gigafactory 3, based in the Lingang free-trade zone, is connected to Yangshan Port, the world's biggest terminal for container carriers, via the 32km Donghai Bridge. The Shanghai factory is Tesla's largest production base, delivering a total of 916,000 units last year to customers in mainland China and overseas markets like the Asia-Pacific region and Europe. Its output represented more than half of Tesla's global production volume last year.

China dominates the global EV supply chain. More than 70 per cent of batteries powering EVs worldwide are produced by Chinese companies, with Contemporary Amperex Technology Limited and BYD taking the top two spots in terms of annual production.

"It will not be an easy decision for global carmakers like Tesla and GM to abandon Chinese-made components because they have a cost advantage and some of them cannot be replaced by other companies due to technological factors," said Qian Kang, who owns a factory that makes printed circuit boards in Zhejiang province in eastern China. "And it takes time for them to adjust their supply chains if carmakers decide to stop using Chinese components."

Tesla, which once accounted for a 16 per cent share of China's EV market when it started producing locally in 2020, saw its market share slide below 7 per cent last year amid an escalating price war and the rise of domestic rivals.

Its market share has fallen to less than 5 per cent this year as Chinese brands from Xiaomi to Leapmotor lured more customers away with models featuring advanced driver assistance systems and high-performance batteries.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.

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