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Tesla Accelerates Localization of China-Made Car Parts

March 23, 2020 11:55 pm

EV car giant Tesla has ordered or intends to order car parts from China’s domestic suppliers, including Ningbo Joyson Electronic, Guangdong Hongtu Technology, Ling Yun Industrial Corp Ltd. and Ningbo Xusheng Auto Tech, according to Cailianshe Monday.

Ningbo Joyson Electronic has received a RMB220 million order by Tesla for the production of Model Y the other day. In early February, Joyson received a statement of intent to cooperate which said that Tesla in interested in partnering with Joyson to let the latter be a supplier for Model 3 and Model Y. Their deal worths RMB1,500 million (~$211 million).

Since the company produce vehicle restraint system components and integrated parts for vehicles, all parts requested in orders by Tesla will be produced by different business groups of Joyson or its affiliates.

Xusheng makes batteries, which will first export to the U.S. for further production and then return to China. Since Tesla Model 3 and Model Y have many components in common, Xusheng’s production capability can be maintained at a high level.

Tesla has been ramping up efforts to localize its entire supply chain in China.

Song Gang, Director of Manufacturing for Tesla Greater China, said at the beginning of 2020 that the locally made car parts represent 30% by then, is expected to reach 70% by July and all made-in-China Model 3 will be fully localized by the end of 2020. Thanks to the localization, the price of Tesla Model 3 is expected to drop to RMB250,000 (~$35,270) from RMB299,050 (~$42,200).