US rejects Tesla bid to seek tariff exemption for autopilot "brain"

WASHINGTON (Reuters) – US trade authorities have rejected Tesla's offer to obtain a 25 percent tariff relief imposed by President Donald Trump on the Chinese-made "pilot" manufactured by his model. 3 and other electric vehicles, one of more than 1,000 refusals related to Chinese products. industrial development plans.

According to documents filed by the Office of the US Trade Representative (USTR) and reviewed by Reuters, requests for exclusion of Tesla and others for products made in China, from aircraft parts to biotechnological instruments, were refused because they were deemed "strategically important". "China 2025".

Tesla declined to comment.

The company has separate tariff exclusion requests pending on rights on the Model 3 screen made in China and on the Model 3 car computer before USTR.

Tesla said Monday in a securities deposit: "Our production costs of our vehicles in the United States have also been affected by import duties on certain components from China."

These denials illustrate a systematic approach by the Trump administration aimed at thwarting China's efforts to develop high-tech industries that, according to Washington, would have benefited from the theft and forcible transfer of US intellectual property.

Made in China 2025, a program to increase China's skills in 10 strategic industries dominated by the United States, is at the heart of trade negotiations and US demands for radical changes in Chinese policy.

These industries include new and autonomous energy vehicles, aerospace, semiconductors, biopharmaceuticals, robotics and artificial intelligence.

Economic damage

Tesla made its first application for the exclusion of its 3.0 Autopilot electronic control unit in July 2018, which she described as "Vehicle Brain" when the automaker based in Palo Alto, Calif., Warned that "the increase in the rates of this coin was causing economic damage to Tesla, through increased costs and impact on profitability." "

In a letter of March 15, USTR General Counsel Stephen Vaughn said the agency was refusing Tesla 's request because it "concerns a product that is not in the market. strategic importance or related to "Made in China 2025 or other Chinese industrial programs." USTR also rejected a request for the earlier version 2.5 of the Autopilot calculator.

It was unclear when the letter was posted on a US government website. Other refusals of exclusion were reported at the same time, including industrial robots imported by Kawasaki Robotics USA and composite panels manufactured by Hexcel Corp in China for various Boeing Co. aircraft.

Among the less technological products cited in the 2025 denials was a wiring harness for a back door imported by Lear Corp.'s Chinese joint venture, Kyungshin-Lear Sales and Engineering LLC.

"The material composition of the product consists of insulated wires, connectors, terminals, tapes and conduits," Kyungshin-Lear said in his application.

USTR has received tariff exclusion requests from China for nearly 13,000 products and rejected 5,311. Of the rejections, 1,166, more than one-fifth, contained the same wording as the request. from Tesla, citing links to Made in China 2025.

NO SOURCE IN THE UNITED STATES

Tesla told USTR that he was unable to find a manufacturer in the United States, adding that "the choice of any other vendor would have delayed the 18-month program (Model 3) with the cleanroom configuration, the chain validation and staff training ".

Tesla says it is updating the autopilot computer's firmware with the latest firmware created in California during its China shipment by Quanta supplier Shanghai.

"For an essential product for consumer safety and for the essence of Tesla, we turned to industry experts who could achieve this quality and complexity in addition to deadlines, which was not possible outside of China, "Tesla wrote. "When it comes to identifying a supplier, we can not risk the lives of our customers because of a supplier default."

The autopilot computer, also used in the S and X models, includes two sets of circuit boards that Tesla calls "the brain responsible for Tesla autopilot functionality" and the vehicle's main safety system.

Tesla has a separate outstanding tariff exclusion application filed in December for rights on the Model 3 screen made in China.

Other exclusion requests also cited the lack of US sources. Kawasaki said that there were no industrial robots manufactured in the United States and that it only produced robots in China and Japan.

In a previously unreported application, Tesla also asked the USTR to remove customs duties on the 43-inch cockpit touch control panel that displays navigation, media, audio, air conditioning, energy display and all cabin controls.

Other automakers have asked for similar exemptions but have not yet received an answer.

At the end of July, General Motors applied for an exemption from the US 25% tariff on its Chinese-made Buick Envision SUV. Envision accounted for nearly 15% of Buick sales in the United States last year.

GM has also requested exclusions for a dozen parts, including push-button ignition switches and transmission bearings.

Nissan Motor Co and Fiat Chrysler Automobiles NV have also filed parts exclusion requests, while Uber Technologies Inc. has requested an exclusion of e-bikes rented via the Uber app.

Even if the United States and China reach a trade agreement in the coming weeks to resolve their differences, companies may not benefit from tariff relief for months or even years. People accustomed to the discussions claim that some tariffs, especially those aimed at the Made in China 2025 industries, could remain in place as part of an enforcement mechanism.

Vice President Mike Pence said on Friday that the way tariffs were removed would be part of this mechanism, aimed at ensuring that China meets its obligations in any agreement.