Tesla shifts supply chain away from China amid tariffs and tensions

Facing tariffs and geopolitical risks, Tesla races to replace Chinese parts—but can it secure lithium without CATL? Investors watch as TSLA stock dips.

, and Administrator

2025 November 16 . 5:38 AM

1 min read

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Tesla shifts supply chain away from China amid tariffs and tensions

Tesla (TSLA) is actively diversifying its supply chain to reduce dependence on Chinese components. The electric vehicle giant has considered Sigma Lithium as a potential supplier for lithium, aiming to lessen reliance on Chinese battery makers like CATL.

Tesla has been historically dependent on Chinese suppliers but has been actively seeking alternatives. The company has already replaced some China-made components with parts sourced elsewhere and plans to switch all other components in the next year or two. This strategy has been accelerated this year due to steep tariffs on Chinese imports.

Tesla is now requiring its suppliers to exclude Chinese parts in the production of its cars in the U.S., citing geopolitical tensions and tariff disputes. However, one significant challenge remains in the transition of lithium-iron phosphate batteries traditionally sourced from China's CATL.

Tesla's stock fell -5.9% this week amidst a broader tech selloff, despite Wall Street managing to eke out a gain. Despite this, Tesla continues to strive for supply chain independence, with the consideration of Sigma Lithium as a potential lithium supplier being a notable step in this direction.