Elon Musk Says Localizing Supply Chains Key To 'Mitigate Geopolitical Risk' Amid US-China Trade Tensions

Piper Sandler analyst Alex Potter says that Tesla Inc. TSLA is the only automaker trying to source batteries from non-Chinese routes at scale as Elon Musk stresses the importance of localization.

What Happened: "Tesla is the only car company that is trying to source batteries, at scale, without relying on China,” a post shared by influencer Sawyer Merritt on X on Tuesday cited the note released by Potter.

The note also said that Tesla will become completely self-sufficient in the future and produce the components required to manufacture batteries, including raw materials.

"Eventually, Tesla will be making its own cathode active materials, refining its own lithium, building its own anodes, coating its own electrodes, assembling its own cells, and selling its own cars," the note said.

Musk also weighed in, saying it's important to establish local supply chains, despite the immense effort, for companies to "mitigate geopolitical risk."

Why It Matters: Amid escalating tensions between the U.S. and China, automakers have raised concerns about Beijing restricting the exports of rare earth metals and other minerals crucial for producing vehicles.

Tesla, meanwhile, reached the one-million production milestone of the Powerwall as the company says it produces 1,000 Powerwall units a day and is on pace to produce over 700,000 units annually, as the company grapples with dwindling sales throughout the globe.

Elsewhere, the Trump administration has accused China of violating the Geneva Trade Agreement, something which the government strongly denies and has asked the U.S. to withdraw the unilateral tariffs.

TSLA scores well on Momentum, Growth, and Quality metrics, but offers poor Value. For more such insights, sign up for Benzinga Edge today!

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

Read Next: