Is Tesla still an American automaker or is it truly Chinese?

The development of the two main models in the Tesla lineup, the Model 3 and Model Y, is being led in China. Revealing?

Who truly holds the cards? Elon Musk, delighted after Donald Trump’s re-election as U.S. president, is an expert in disinformation. He enjoys manipulating and embellishing the truth to his advantage, notably that of a libertarian entrepreneur who denounces government intervention in business… but who fully benefits from subsidies to sell his Tesla cars (diverse grants and bonuses) and to propel his SpaceX rockets. The character isn’t shy about inconsistencies, and since no one challenges him on this, why change?

Nevertheless, the reality is far less idyllic than often thought. His sudden rapprochement with Donald Trump, during the campaign, is also seen as a form of opportunism. The 47th U.S. president has never hidden his dislike for electric vehicles, and Musk hopes to have played his cards right and been spared. So far, history has supported him. But Trump, if he ultimately maintains financial support for the electric industry (to be confirmed), will not dirty his hands with Chinese cars. The technological and commercial barricades will be total, which remains a problem for Tesla.

Why? Because today, Tesla is forced to navigate a double game: between the United States and China. Europe is completely ignored, honestly. Europe, which has become enamored with the South African businessman at the expense of its own industry, now in serious difficulty.

Long Live Made in China?

In fact, the United States has already lost the war against Chinese auto industry, and the emergency measures enacted by the Biden administration will change nothing. They will only slow down the inevitable. Evidence of this is Tesla’s ongoing direct negotiations with China for special privileges, especially regarding data centralization, personal data, agreements on artificial intelligence, and embedded software. To the point where today, the question arises: is Tesla still an American manufacturer, or primarily Chinese?

The Model 3 and Model Y of the new generation are developed and industrialized there before being adapted and marketed elsewhere. The reason is obvious: if Chinese constraints are met, then all others will be followed worldwide. Furthermore, most of Tesla’s subcontractors are Chinese. Batteries, electronics, equipment—Tesla has no choice but to source from China to keep prices competitive and stay in the race. If the Tesla vehicles were developed in North America, their production cost would be prohibitively high. This is akin to Apple with its iPhone, but on an even higher level. Tesla’s engineers are not solely based in California, Palo Alto; they are mainly located in Shanghai.

China has played its cards cleverly: first making Tesla dependent on its market by opening its doors wide, and now threatening to cut everything off if Elon Musk does not respect new rules of the game. Tesla cannot afford to lose the Chinese market; otherwise, it would be an almost certain bankruptcy.

This priority given to China annoys American fans. They were very vocal at the end of 2023 when the highly anticipated Tesla Model 3 restyled version was presented and launched in China, then exported to Europe before being industrialized in the U.S. in spring 2024. This pattern will repeat with the restyled Model Y “Juniper”. Test prototypes are seen on Chinese roads just like BYD or XPENG vehicles.

So, is Tesla still American, or has it been Chinese for a very long time? All the ideological and demagogic rhetoric of Trump and Musk is challenged by this reality. But as long as the people remain unaware, everything continues smoothly!

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