Tesla Claims Affordable Autonomous Cars Aren't Possible Without China
【Summary】Because of tariffs that Donald Trump put into place on Chinese-made automotive parts and the U.S.’ government’s decision to reject a tariff exemption on Tesla’s brain for its Autopilot, affordable autonomous cars might not happen.
President Donald Trump's 25% tariff on a variety of imports from China has sent a ripple throughout the entire automotive industry. The tariff has caused automakers to reconsider bringing vehicles to the U.S., like Ford with the Focus Active, and has seen brands warn that the 25% tax would increase the price of cars and cost thousands of jobs. Tesla is the latest automaker to feel the effect of Trump's tariff.
Trouble With Chinese-Made Parts
In May, Tesla's CEO Elon Musk unveiled the automaker's Autopilot 3.0 hardware. The system included a new chip that would enable the brand's cars to operate on their own, acting as fully autonomous vehicles. The concept soon went into reality, as consumers can now opt for the FSD upgrade for an extra $6,000.
As TechCrunch reports, this hardware can be seen as the "brain of the vehicle" and is assembled in Shanghai, China by Quanta Computer. Since the hardware is assembled in China, it falls under the U.S. government's tariff. Tesla looked for a way around this, requesting a tariff exemption from the government, but the request was denied.
Because of the tariff, Tesla has had to change its plans. TechCrunch claims that the tariffs could see the automaker find another country to make its hardware or delay further introducing the technology, which would impact safety.
"The imposed tariffs are forcing us to either source a new supplier, pass the cost increase to the end customer, or reduce operational costs within our internal operations, all having a reverse impact for what [we believe] to be the intention of the tariff," wrote the company in an application to the United States Trade Representative (USTR) on November 16 when the automaker requested exemption from the tariff.
Forget About Affordable Autonomous Teslas
Now that the government has officially rejected Tesla's bid, Musk claims that China is the only country that can deliver its hardware components on the automaker's strict deadlines. At the moment, Tesla states that it has a current timeline of six months, which includes development to production.
"Tesla was unable to source manufacturing for Autopilot 3.0 ECU in the United States," said a filing from the company. "We turned to industry experts who could achieve this quality and complexity in addition to the deadlines, which was not possible outside of China."
These parts are crucial to giving Tesla's models the ability to operate on their own, and because of the tariffs, consumers are now expected to pay the hefty price to upgrade their electric cars. To get full self-driving capability with a Tesla, consumers are expected to pay $6,000, which is a substantial amount. Ticking that box brings the price of Tesla's already-expensive cars to even higher prices. For the Model S, a base Standard Model with the equipment is $85,200.
With Trump's tariffs in place, the price of Tesla's fully autonomous system won't come down at all, but could eventually go up.
Vineeth Joel Patel
Joel Patel has been covering all aspects of the automotive industry for four years as an editor and freelance writer for various websites. When it comes to cars, he enjoys covering the merger between technology and cars. In his spare time, Joel likes to watch baseball, work on his car, and try new foods
Volkswagen ID Life Concept is a Peek at an Affordable City Electric Car
2022 Mercedes-Benz EQB’s European Debut Previews U.S. Arrival
Rivian R1S, R1T Rated at Over 300 Miles by EPA
Lotus Confirms Four Electric Vehicles Are Coming, First SUV Arriving in 2022
Hyundai's Genesis Brand Planning To Go All-Electric by 2025
Ford Receives Over 130,000 Reservations for the F-150 Lightning, Strong Demand for Electrified Vehicles
Electrify America Adds Smartphone Compatibility To Help EV Owners Find Chargers
Rivian Reportedly Waiting for Government Approval To Deliver R1T
- Baidu Launches its Apolong II Self-Driving Minibus in China for its 'Apollo Go' Ride-Hailing Service
- Volkswagen’s ID.4 Pro SUV Awarded an EPA Estimated Range of 249 Miles, Edging Out the Ford Mustang Mach-E
- 2022 Mercedes-Benz EQB’s European Debut Previews U.S. Arrival
- EV Startup Fisker Inc. Announces a $600 Million Green Convertible Senior Notes Offering
- BMW iVentures Invests in Silicon Valley-based Self-Driving Truck Startup Kodiak Robotics
- Aviva Technology Raises $26.5 Million in Series A Funding for its High Bandwidth, Ethernet-based Automotive Networking Solutions
- 2022 Nissan Leaf Gets Price Cut, More Features
- China's XPeng Officially launches the More Affordable P5 Fastback, the World's First Production Vehicle Equipped with Lidar
- Ford to Double its Production Target for the Electric F-150 Lightning Due to Strong Demand
- Mazda Announces Plans to Launch 13 Electrified Vehicles by 2025