Here's why Trump advisor Peter Navarro's Tesla claims are untrue
What's the story
A public spat has broken out between Tesla CEO Elon Musk and US Presidential Advisor Peter Navarro. The two are at loggerheads over the claim that Tesla cars are mostly put together from foreign-made parts. Navarro made the claim while appearing on CNBC. He said Musk "isn't a car manufacturer — he's a car assembler," adding that Tesla uses cheap foreign parts as Musk opposes tariffs. However, this statement is not necessarily true. Let us explain why.
Manufacturing model
The company is famous for in-house production
Tesla is famous for its extreme vertical integration, producing as much as possible in-house instead of relying on a network of suppliers for vehicle materials and components. Even though it does use some third-party suppliers, the company builds its own batteries and even set up an in-house lithium refinery for battery raw materials. This is what sets Tesla apart from most other modern automakers that heavily rely on external suppliers.
Evolution
Past assembly model and current practices
The only Tesla vehicle that could be considered "assembled" instead of manufactured was the first Tesla Roadster, which utilized off-the-shelf parts. However, production of this model ceased in 2012 and Tesla has moved away from this practice. Today, Tesla's vehicles are mostly built with American-made parts, contradicting Navarro's claim about the company's manufacturing practices.
Tariff implications
Impact of tariffs on Tesla and other automakers
While long-term tariffs on car parts could disrupt the auto industry, analysts believe Tesla will be less affected than its rivals. Investment firm Bernstein predicts a less than 5% impact to Tesla's gross profit margins from such tariffs, in comparison to 10-20% for most automakers. This further reinforces Musk's defense against Navarro's claims about the company's reliance on foreign-made parts due to his opposition to tariffs.
Rankings
Tesla ranks high on Cars.com index
According to government data, for the model year 2025, 75% of the parts for Tesla's Model 3 Long Range come from the US or Canada. Meanwhile, Cars.com's 'Made in America' index ranks Tesla Model Y as the number one car based on NHTSA parts data and plant locations, among other factors.