Tesla requested for tax exemption upon Model 3’s computer brain

Tesla requested for tax exemption upon Model 3’s computer brain


Tesla has sought an exemption from 25 percent tariff upon imports of Chinese products imposed in August by the Trump administration. Tesla, in its new Model 3 sedan, has been using Chinese-made car computer which the electric carmaker termed as “brain”, and asked the government that without exemption, it will be an alarming situation for its bottom line vehicles.

Previously, in an unreported request, the government was told by the Tesla that the rise in tariffs for that part in question will not only be pushing the company to increase the cost but will also affect its profitability.

Besides Tesla, other carmakers including leading U.S. automaker General Motors has also warned the government about the rising cost arising due to the tense situation between two largest economies of the world imposing tariffs on imports. And that 25 percent tariffs imposed by the United States Trade Representative’s Office in 2018 has badly impacted about $16 billion in imports of U.S. from China which also includes the Chinese-made computer which Tesla has been using in its Model 3 cars assembled in its facility at Fremont, California.

Tesla without disclosing the name of computer supplier in its redacted request posted on USTR’s website December 17, showed its inability to find another manufacturer as an alternative that can meet the required specifications, volumes requested and timeliness necessary for continued growth of the company.

The line validation, clean room setup and staff training requirements arising due to change of supplier for computer of vehicle would have delayed the Model 3 program by 18 months, added Tesla; and safety and acceptance of final product by the customers could be resulted from possible higher risk of company getting poor quality part which could lead the quality issues.

Similar type of requests were also been made by other automakers, like GM, Nissan, Fiat and Uber, which are yet to be answered.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.