Reuters reports that Tesla is now actively directing its suppliers to exclude China-made components from vehicles built in the United States, a significant strategic pivot that places it alongside General Motors in a broad industry exodus from Chinese sourcing. According to people familiar with the situation, the Elon Musk-led company aims to complete this transition within the next one to two years.
This move, first reported by The Wall Street Journal, highlights how escalating geopolitical tensions and unpredictable tariff policies are forcing the reshaping of automotive supply chains. Executives have struggled with fluctuating tariffs in the U.S.-China trade dispute, which complicates long-term pricing strategies. The pressure is palpable across the industry. John Bozzella, CEO of the Alliance for Automotive Innovation, recently emphasized the urgency of securing critical components, stating, «If the shipment of automotive chips doesn’t resume – quickly – it’s going to disrupt auto production in the U.S. and many other countries.»
The vulnerabilities extend far beyond semiconductors. China’s dominance in rare earth processing and magnet production creates a critical bottleneck, a point driven home when Ford had to halt Explorer production earlier this year over missing $40 magnets. Tesla’s recalibration coincides with a challenging period in China itself, where its October sales of China-made electric vehicles fell 9.9%. Meanwhile, Tesla’s Chinese production output dropped 32.3 percent since September.
The race to build resilient, North American-centric supply chains is now a top priority. Tesla has already ceased using Chinese suppliers for certain U.S. vehicle components and is bringing battery production for energy-storage products to Nevada. This collective shift by Tesla and GM signals a new era for the auto industry, where geopolitical de-risking is becoming as crucial as cost and quality.
