Tesla CEO Elon Musk has taken to Twitter to deny a report that said his company is considering exporting cars made in China to North America.
The report came from Reuters, citing two anonymous sources “with knowledge of the planning,” which said that Tesla was considering the shift in logistics for two main reasons.
The first was due to Giga Shanghai’s cost-efficient production.
Over the summer Tesla upgraded Giga Shanghai’s production lines, increasing the factory’s output from around 750,000 cars per year to over 1 million. The factory has also been able to lower the cost to produce each vehicle by localizing its supply chain, which as of the most recent update stands at over 95%.
The other main reason was due to what it said was declining demand in China.
In the most recent full month of production and deliveries, Giga Shanghai produced a record 82,088 new Model 3 and Model Y cars in October. Meanwhile data from the China Passenger Car Association (CPCA) said Tesla delivered 17,200 cars in China during the same month.
That discrepancy between production and deliveries has been cited as the all too familiar argument of declining demand, ignoring the fact that Tesla prioritizes production in the first half of a quarter for exports, so domestic deliveries always decline going from the final month of a quarter into the first of the next.
Due to this and other factors, the anonymous sources said Tesla was investigating whether it would be “cost competitive” to export cars from China to the United States and Canada.
In typical Musk fashion, he replied to the story on Twitter with one word – “False.” He did not provide any further details.
— Elon Musk (@elonmusk) November 11, 2022
Even before Musk said the story was false, it seemed far-fetched to begin with. Tesla is already supplying cars in North America from its two vehicles factories in the US – Fremont and Giga Texas, and seems to have no pressing need to import cars to satisfy the current level of demand with these two factories.
There is also the recent passage of the Inflation Reduction Act (IRA), which provides a big incentive for Tesla to produce its cars and batteries in the United States instead of importing them from China.