Will the Tesla Model 3 be the most American-made car?
Cars are global products these days. Automakers source parts and expertise from around the world, and they build vehicles in different countries to be closer to markets or to take advantage of cheaper labor. Those who believe in buying American find that it isn’t as simple as buying an American brand. To sort through the complex international web of auto production, the Kogod School of Business at American University issues an annual study that ranks cars according to how “made in America” they truly are. Its 2016 findings are based on seven criteria, including how many parts used in a particular vehicle were made in America, how much labor was performed in the USA, and how much of the research and development were done stateside.
Above: Tesla Model 3 (Instagram: elonmusknews)
Interestingly, several models from Honda and Toyota are more than 76% American-made. The iconic Chevrolet Corvette is 83% American-made, and the USA’s best-selling vehicle, the Ford F-150 pickup truck, is, appropriately, 85% American-made. The most all-American vehicles are the Buick Enclave, the Chevrolet Traverse and the GMC Acadia, each 90% made in the USA. However, a certain California carmaker may soon be the reddest, whitest, and bluest of them all.
Above: Tesla Fremont Factory production line (Image: Motley Fool via Tesla)
Tesla has always extolled its patriotic bona fides. Elon Musk has described himself as “nauseatingly pro-American.” The company has made a special point of hiring military veterans. And of course, at a time when many are lamenting the decline of American manufacturing, what could be more patriotic than employing over 25,000 Americans in a rapidly growing, future-oriented industry? That said, at the moment, the Tesla Model S is pretty far out of Kogod’s top tier of Made in the USA vehicles - according to Tesla about 55% of its components are American- or Canadian-made. Once the Gigafactory ramps up to volume production however, that proportion is expected to soar like a rocket (red glare included).
Above: Tesla Model S (Image: Motley Fool via Tesla)
When Tesla begins using its new 2170 battery cell, which for Model 3 is expected to happen in the second quarter of this year, its vehicles will be 95% made in the US, making them the “most American” cars available. Panasonic is continuing to produce battery cells in Japan and elsewhere, but will be steadily expanding production at the Gigafactory in Nevada. Tesla also plans to source much of the raw materials in those cells from the US. The company is believed to be developing a source of lithium at Silver Peak, not far from the Gigafactory, and Nevada lawmakers have proposed new tax incentives aimed at increasing lithium production in the state.
Above: The Gigafactory's 2170 battery cells to be used in the Tesla Model 3 (Youtube: Electrek.co)
Of course, Tesla’s decisions to keep production close to home aren’t made only for patriotic reasons - they have to do with access to skilled workers, and keeping supply chains short. But with environmental regulations - especially the CAFE standards that encourage automakers to produce electric vehicles - possibly on the chopping block in Washington, it surely can’t hurt to be able to point to the major economic benefits of maintaining America’s leadership in the electric vehicle and renewable energy industries.