A boon for Tesla’s future growth

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April 2, 2023

By Kevin Armstrong

According to sources familiar with the matter, Tesla CEO Elon Musk is planning a visit to China as early as April, with the intention of meeting Chinese Premier Li Qiang. This marks Musk’s first visit to the country since the start of the COVID-19 pandemic and since President Xi Jinping secured a third term.

While Tesla and China’s State Council Information Bureau have not yet commented on the matter, the potential benefits of Musk’s visit to Tesla are significant.

Strengthen relations with the government for preferential treatment

China is Tesla’s second-largest market, after the United States, and the Shanghai Gigafactory is the company’s largest manufacturing hub. As the Chinese government continues to push the adoption of electric vehicles in an effort to cut carbon emissions and tackle air pollution, the country represents an increasingly lucrative market for Tesla. Musk’s visit has the potential to strengthen Tesla’s position in the Chinese EV market by fostering closer ties with the government and exploring further opportunities for collaboration.

First, a meeting between Musk and Premier Li Qiang could pave the way for preferential treatment and increased support for Tesla in China. This could translate into additional incentives for the company, such as tax breaks, subsidies or streamlined regulatory approval processes, which in turn would encourage further investment and expansion into the Chinese market.

Improve supply chain management and supplier relationships

Second, the visit could provide an opportunity for Tesla to improve supply chain management and improve relationships with local suppliers. As the global chip shortage continues to impact the auto industry, strengthening relationships with Chinese suppliers could help Tesla ensure a more stable supply of essential components, mitigate production delays and ensure timely delivery of vehicles to customers.

Partnering with Chinese tech giants for innovation

Third, Musk’s visit could lead to greater collaboration between Tesla and Chinese tech giants, such as Baidu, Tencent and Alibaba, who are actively investing in the EV space. Joining forces with these companies could drive innovation, particularly in the realms of autonomous driving, battery technology and charging infrastructure, ultimately increasing Tesla’s competitive edge in the marketplace.

Finally, by establishing a more robust presence in China, Tesla may be able to tap into the country’s growing talent pool of EV engineers and researchers. Access to this skilled workforce could accelerate research and development initiatives and further solidify Tesla’s position as a leader in electric vehicle technology.

In conclusion, Elon Musk’s anticipated visit to China carries several potential benefits for Tesla. By fostering closer ties with the Chinese government, local suppliers and tech giants, the company can strengthen its position in the market and accelerate its growth. As the largest EV market in the world, China’s importance to Tesla’s future success cannot be overstated, making Musk’s upcoming visit a critical moment for the electric automaker.

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April 1, 2023

By Kevin Armstrong

Tesla gave us an inside look at the crash safety engineering lab with its latest YouTube video (below). Vice President of Vehicle Engineering Lars Moravy shares some fascinating insights into what makes Tesla vehicles so safe. He explained that Tesla considers passive safety from the outset of a project.

Passive safety refers to features and structures that protect occupants in the event of an accident, as opposed to active safety systems which help prevent accidents in the first place. Tesla’s two top priorities in passive safety design are occupant protection and battery protection.

Progressive crash structure

Moravy elaborated on Tesla’s crash structure strategy, saying, “What we’re trying to do is absorb as much energy from whatever object you hit before it gets to the cabin.” This is accomplished through a progressive crash structure consisting of a bumper beam, crush can and front underbody casting recently debuted at Austin.

Multiple load paths: vertical and lateral energy absorption

A key feature of Tesla’s safety design is multiple load paths, which accommodate vehicles of various sizes and types. Moravy explained, “There’s a higher load path for compatibility with other vehicles on the road … sometimes we need a lower load path if you hit a different sized object.” These load paths work vertically and laterally to ensure that energy is absorbed and the car is pulled away from the object it collides with.

Reinforcement of cabin safety with door rings, glass and battery structure

The door rings, glass and battery structure enhance the safety of the cabin. One unique aspect of Tesla vehicles is the low battery placement, which creates a lower center of gravity. This, combined with the suspension system, significantly reduces the risk of tipping over.

Crash Test Success: Model Y Five-Star Rating

Moravy proudly displayed a Model Y that had been crash tested at NHTSA for a five-star rating, emphasizing the effectiveness of Tesla’s safety systems. She pointed out that “all of that energy was absorbed up front, really stopping in the cabin,” allowing the occupants to exit the vehicle safely after the crash. Furthermore, the cabin remained largely intact, retaining its original space to ensure the survival of the occupants.

Tesla’s commitment to safety begins in the design phase, with a focus on passive safety and innovative engineering. Multiple load paths control crushing and a low center of gravity all contribute to the exceptional safety levels consistently achieved by Tesla vehicles. As Moravy rightly stated, Tesla’s top priority is to “protect the occupant” and their engineering efforts are a testament to that mission.

April 1, 2023

By Kevin Armstrong

Tesla’s rear-wheel drive (RWD) Model 3 variant will be eligible for the $7,500 Inflation Reduction Act (IRA) electric vehicle tax credit for a little longer than expected. The tax credit was originally due to expire for the rear-wheel drive vehicle on March 31. However, the updated guidelines are expected to be released on April 18, 2023. The updated guidelines will cover battery manufacturing, assembly, and mineral sourcing requirements, impacting the eligibility of several electric vehicles (EVs) for full or partial credits.

The rules released for January 1 have been updated. According to the new guidance, at least 50 percent of an EV’s battery components must be manufactured and assembled in the United States or in a country with a free trade agreement for the vehicle to be eligible for IRA tax credits. Additionally, at least 40 percent of the minerals used in an EV battery must come from the United States or a country with a free trade agreement with the United States. This percentage will increase by 10% annually, reaching 50% by 2024.

Impact on Tesla Model 3 RWD tax credit eligibility

Tesla’s Model 3 RWD battery pack, manufactured and assembled in China, uses CATL’s LFP cells, which do not meet new battery sourcing guidelines. As a result, the Model 3 RWD will not qualify for tax credits. The current Tesla Model 3 RWD price is $42,990 without the tax credit. However, Tesla’s Model 3 Performance variant, equipped with domestically manufactured and assembled battery packs, will still be eligible for the full $7,500 EV tax credit.

A US official told Reuters that driving on the Treasury battery would result in fewer electric vehicles being eligible for the credits. The Biden administration hopes the tax credit changes will lead to higher EV sales as automakers adjust their supply chains to comply with critical rules on mineral and battery components.

Compliance definitions: mining, processing and recycling

To certify compliance with US battery procurement guidelines, the Treasury has established activities and processes related to the extraction, processing, and recycling of battery materials. The rules are part of a $430 billion climate bill that aims to reduce US dependence on China for electric vehicle batteries and solar panels.

In February, the Treasury revised vehicle classification definitions, making more Tesla, Ford, General Motors and Volkswagen electric vehicles eligible for tax credits of up to $7,500. However, some vehicles may see credits decrease as new battery guidelines go into effect.

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