Biden’s Tariffs Surge: Impact on Tesla’s Model 3


President Biden’s new tariffs, particularly on Chinese EVs and EV batteries, will significantly impact the U.S. electric vehicle landscape. The 100% tax on Chinese EVs aims to protect U.S. automakers but could also make EVs with Chinese batteries more expensive. Tesla’s cheapest Model 3, the RWD version, will be affected by higher tariffs on imported Chinese EV batteries.

Why does it matter?

With the new tariffs, Tesla might face increased production costs for the Model 3 RWD. The U.S. government is pushing to boost domestic battery manufacturing and reduce reliance on Chinese supply chains. As a result, EVs containing Chinese battery components may no longer qualify for tax credits, impacting consumer demand and affordability.

How is it going to shape the future?

The tariffs on Chinese batteries and minerals may have a more substantial short-term impact than those on Chinese cars. Automakers selling EVs in the U.S. are incentivized to reduce Chinese content to maintain eligibility for tax credits. As the domestic supply chain for batteries is developed, prices are expected to stabilize. The focus on building domestic battery manufacturing capacity signals a shift towards greater self-sufficiency in the EV industry, impacting not just Tesla but all electric vehicle manufacturers in the U.S.