Tesla Inc shares are trading lower on Wednesday due to the company’s decision to suspend plans to ship parts for its Cybercab and Semi from China. This move comes after President Donald Trump raised tariffs on Chinese goods, escalating the trade war between the US and China.
Reasons Behind the Decline
The trade war between the US and China has been intensifying, with President Trump imposing higher tariffs on Chinese goods. Initially, Tesla planned to absorb the costs of the 34% tariffs imposed by Trump. However, as the trade war escalated and tariffs were raised to 84%, 125%, and eventually 145%, the company decided to change its plans.
Impact on Production
Tesla was expected to start receiving components for Cybercab production in the coming months, with trial production scheduled to begin in October and mass production targeted for 2026. However, the suspension of parts shipments from China may push back these timelines. The company has been increasing the proportion of parts sourced from North America for its US-based factories in anticipation of potential tariffs.
Current Developments
- Tesla has stopped taking new orders for its Model S and Model X vehicles on its Chinese website.
- The company has been hiring for the start of production of its Cybercab.
- Production of the Semi electric trucks is planned to ramp up in 2026, but the timeline may be affected by the parts order suspension.
Stock Performance
Tesla shares were down 2.39% at $248.10 on Wednesday. The company’s decision to suspend parts shipments from China has raised concerns about the impact of the trade war on its production and sales.
Looking Ahead
The trade war between the US and China continues to escalate, and its impact on Tesla’s production and sales remains to be seen. The company’s ability to adapt to the changing trade environment and find alternative sources for its parts will be crucial in determining its future success.