Tesla urges tariff exemption for Chinese-made car computer ‘brain’

Author: 
Reuters
ID: 
1546674397853122000
Sat, 2019-01-05 00:03

WASHINGTON: Tesla has asked the Trump administration to exempt
the Chinese-made car computer “brain” of its new Model 3 sedan
from 25 percent 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 previously unreported
request for tariff relief from the government.
Led by tech billionaire Elon Musk, Tesla is among a host of
companies, including No. 1 US automaker General Motors, to warn of
growing costs related to the tariff war between the world’s two
largest economies.
The Chinese-made computer, used by Tesla in the car assembled in
Fremont, California, was among $16 billion in imports that were hit
with 25 percent tariffs by the United States Trade
Representative’s Office in 2018.
In a redacted request posted on a government website by the USTR on
December 17, Tesla did not identify the supplier of the computer.
But it said it had been unable to find another manufacturer “with
the required specifications, at the volume requested and under the
timelines necessary for Tesla’s continued growth.”
Tesla, which called the Model 3’s computer “the brain of the
vehicle,” added that “choosing any other supplier would have
delayed the (Model 3) program by 18 months with clean room setup,
line validation, and staff training.”
Using 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 in its request for tariff
relief.
Tesla declined to comment on the tariff matter on Friday. But it
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 US market alongside the larger Model S.
Other automakers have sought similar exemptions but have not yet
received an answer.
GM in late July sought an exemption to a 25 percent US tariff on
its Chinese-made Buick Envision sport utility vehicle. The Envision
accounted for nearly 15 percent of US Buick sales last year, even
as sales fell by 27 percent.
In October, GM also sought exclusions for about two dozen parts,
including push button ignition switches and transmission bearings.
Nissan Motor Co. and Fiat Chrysler Automobiles NV have also filed
exclusion requests for parts, while Uber Technologies Inc. asked
for an exclusion for electric bikes rented through the Uber
app.
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.

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Source: FS – All-News-Economy
Tesla urges tariff exemption for Chinese-made car computer ‘brain’