Tesla Requests Tariff Waiver On Graphite From China

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Tesla reported its first quarterly profit above $1 billion on record auto deliveries
Tesla reported its first quarterly profit above $1 billion on record auto deliveries

Tesla CEO Elon Musk asked for an extended tariff waiver on graphite from China to make car batteries.

CNBC reported Thursday that Tesla filed three public comments on Wednesday, the deadline to file with the U.S. Trade Representative (USTR), supporting waivers for tariffs on graphite. The electric car maker asserted that only mainland China could provide the quantity of graphite it needs in flake or powder form to manufacture his company's car batteries in the U.S.

“As a result of Tesla’s due diligence process for suppliers of artificial graphite, globally and in the United States, Tesla has concluded that no company in the United States is currently capable of producing artificial graphite to the required specifications and capacity needed for Tesla’s production,” Tesla wrote.

Tesla was joined by battery maker SK Innovation and hundreds of other companies in requesting the tariff waiver on graphite, which is used in the anode component of lithium-ion batteries in electric cars.

The supply chain crisis have been a serious burden for companies and consumers. Companies have asked the USTR for extended tariff waivers on parts and materials imported from China used to make or repair cars as supply chain issues linger and prices for them soar.

In June, Musk tweeted, “Our biggest challenge is supply chain, especially microcontroller chips. Never seen anything like it. Fear of running out is causing every company to overorder - like the toilet paper shortage, but at epic scale.”

Earlier this week, Musk took to Twitter again and wrote, “Oh man, this year has been such a supply chain nightmare & it’s not over!”

The Trump administration’s trade war with China has contributied to price hikes, particularly for the auto industry. In late September 2020, Trump declared a national emergency to deal with the threat of a lack of graphite.

Temporary exclusions to some tariffs were allowed to expire in late 2020 and earlier this year.

SK Innovation is asking the USTR to extend the exclusions to protect its investments in the U.S.

“A renewed exclusion will allow SK to manufacture quality breakthrough electric vehicle components at competitive prices for American OEMs, while creating full-time jobs that support American families,” SK wrote the USTR.

In October, the USTR said that it would consider reinstating tariff exclusions on a case-by-case basis, particularly for imports that can only be obtained from China.

CNBC noted that the recent outpouring of industry pleas for tariff exemptions could spur the Biden administration to reinstate government exclusions on 25% tariffs on artificial graphite imported from China.

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