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Tesla Encourages Suppliers to Diversify Production Outside China and Taiwan

By: Get News


California - May 28, 2024 - Tesla has asked its vendors to set up production sites outside of China and Taiwan in a calculated attempt to reduce supply chain risks. With this change, the region's increasing geopolitical tensions and trade uncertainties need to be addressed. Tesla's approach emphasises the need to broaden its production sites to provide resilience and stability in its supply chain.

Particularly, Tesla has advised its Chinese suppliers to think about establishing themselves in Mexico. The nation has a number of benefits, chief among them being its close proximity to Tesla's gigafactory in Monterrey, which is anticipated to be essential to the company's future growth ambitions. Favorable trade accords, such as the United States-Mexico-Canada Agreement (USMCA), which makes it easier to sell parts and cars to the US, make the transfer to Mexico easier.

Insiders in the business point out that Mexico has grown to be a hotspot for investment, drawing a lot of supply chain businesses ready to take advantage of the advantages the country offers. Among these advantages are talent subsidies and tax breaks, which draw industries wishing to gain a foothold in North America to Mexico.

Apart from Mexico, Tesla is looking at possibilities in Vietnam and India as well. Already, the firm is obtaining a sizable portion of its auto parts from Indian producers. Small plastic components to intricate systems like differentials and wheel hubs are all included in this. Despite somewhat higher costs, India has become a competitive substitute for China because of its superior manufacturing capabilities.

By sourcing from India, Tesla is following a larger trend of diversifying away from China. Offering incentives, including lower import taxes, to businesses that commit to local production, the Indian government has been aggressively enticing international electric vehicle (EV) manufacturers to invest in the nation. This fits in with Tesla's plan to strengthen its supply chain and lessen reliance on a single vendor.

Die casting is one of the main technologies Tesla wants to grow through its varied supply chain. Producing lightweight, premium parts necessary for electric cars requires this sophisticated production technique. Tesla wants to reduce the risks related to geopolitical volatility while also maintaining high production standards, thus it is encouraging the construction of die casting plants outside of China. 

"By encouraging our suppliers to diversify production outside of China and Taiwan, we aim to bolster the resilience and stability of our supply chain amidst increasing geopolitical tensions and trade uncertainties,” says Martin Yang, Spokesperson, Honjenny. “Expanding our manufacturing footprint to countries like Mexico, India, and Vietnam not only mitigates risks but also leverages the unique advantages these regions offer, ensuring we continue to deliver high-quality products to our customers."

About Honjenny: 

Tesla is a proactive supplier chain risk management organization, as seen by its push for its suppliers to open facilities outside of China and Taiwan. In addition to protecting its supply chain, Tesla is creating the conditions for future expansion and innovation in the electric vehicle industry by diversifying its production sites to include Mexico, India, and Vietnam. In the face of global uncertainties, this tactic emphasizes the need for flexibility and adaptability.  

Media Contact
Company Name: Honjenny
Contact Person: Martin Yang
Email: Send Email
Country: United States

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