Summary
Tesla China shortened payment cycle to 90 days for suppliers
95% of components for Tesla Giga Shanghai from local suppliers
Comparison with BYD shows different supplier relationships
BYD and SAIC Maxus requested 10% reduction in prices for car parts
BYD claims renegotiating prices with suppliers is an annual practice
Article
Tesla China has recently announced that its payment cycle with suppliers has shortened to around 90 days, down from 100 days in 2023. This change reflects the company’s ongoing efforts to strengthen its relationship with supply chain partners. Grace Tao, Tesla China’s Vice President of External Affairs, shared this update on Weibo, emphasizing the high percentage of components sourced from local Chinese suppliers for Tesla Giga Shanghai. She credited these close ties to Chinese suppliers for the company’s success in China and globally.
The announcement made by Tesla China regarding its shortened payment cycle with suppliers highlights the company’s commitment to fostering strong partnerships within its supply chain. This move also distinguishes Tesla from other companies in the industry, such as BYD, which recently sparked controversy by asking suppliers to reduce prices by 10%. The leaked letter from BYD requesting price reductions for passenger car components led to discussions in China about the practices of renegotiating prices with suppliers.
In response to the interest generated by the leaked letter regarding price reductions, BYD’s General Manager, Li Yunfei, explained that renegotiating prices with suppliers is a standard annual practice. This explanation was supported by the discovery of a similar letter from SAIC Maxus, another automotive company, requesting a 10% price reduction for car parts. The confirmation of this pricing strategy by multiple companies underscores the competitive nature of the automotive industry in China and the importance of maintaining cost-efficiency in supply chain management.
Tesla’s decision to shorten its payment cycle with suppliers not only demonstrates its focus on developing strong relationships with partners but also reflects its strategic approach to business operations. By reducing the payment cycle to 90 days, Tesla aims to streamline its supply chain processes and ensure timely payments to support the continued growth of its operations. This proactive approach aligns with Tesla’s reputation for innovation and efficiency in the electric vehicle market.
As Tesla continues to expand its presence in China and strengthen its partnerships with local suppliers, the company remains committed to driving innovation and sustainability in the automotive sector. By sourcing a significant percentage of components from Chinese suppliers for its Giga Shanghai production facility, Tesla is able to leverage the expertise and resources available in the region to enhance its manufacturing capabilities. This collaborative approach not only benefits Tesla but also contributes to the growth of the local economy and promotes technological advancements in the electric vehicle industry.
Overall, Tesla’s efforts to improve its relationship with suppliers, streamline its supply chain operations, and support local manufacturing in China reflect the company’s commitment to excellence and sustainability. By maintaining a competitive edge in the automotive market and cultivating strong partnerships with suppliers, Tesla is well-positioned to drive continued growth and innovation in the electric vehicle industry. The company’s strategic initiatives, such as the shortened payment cycle with suppliers, underscore its dedication to operational efficiency, cost-effectiveness, and collaboration for long-term success.
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