Factors including the devaluation of the RMB, lower raw material prices in China and higher auto prices in the US have made Chinese exports to the US potentially cost-competitive.

(Image credit: CnEVPost)

Tesla has reportedly considered plans to export Chinese-made electric vehicles to the US and Canada, although this has been denied by the company's helmsman, but it's an interesting development worth watching.

Tesla has been evaluating whether the Model 3 and Model Y electric vehicles made at Giga Shanghai could be sold in North America as soon as next year, Reuters said in a report on Saturday, citing two people familiar with the matter.

Tesla's assessment includes considering whether parts made by the US electric vehicle maker's suppliers in China comply with US and Canadian regulations, according to the report.

One of the people said Tesla's Shanghai plant has been working on initial plans for a small pilot production run of cars in the first quarter of 2023 that would meet North American standards for possible export.

After the Reuters report was published, Tesla CEO Elon Musk responded with a tweet saying "False," without providing further details.

— Elon Musk (@elonmusk) November 11, 2022

Tesla has a factory in Shanghai that produces the Model 3 and Model Y, and now has an annual capacity of 1.1 million units after an upgrade earlier this year.

The plant is Tesla's largest production facility in the world and not only supplies electric vehicles to Chinese consumers, but is also an export hub for the company, with destinations including markets in Europe, Australia and Southeast Asia.

Tesla sold 71,704 China-made vehicles in October, including 54,504 for export, according to a report released earlier this month by the China Passenger Car Association (CPCA).

That export volume was a record high, up 34.03 percent from 40,666 units a year ago and up 887.03 percent from 5,522 units in September. This also means that Tesla delivered 17,200 vehicles to local Chinese consumers in October.

In the North American market, Tesla's strategy so far has been to meet local demand from its factories in Fremont, California and Austin, Texas.

Factors including a weaker RMB against the dollar, lower raw material prices in China and higher prices for Tesla and new vehicles in the US have made Chinese exports to the US potentially cost-competitive, Reuters said in its latest report, citing people familiar with the matter.

If the US portion of the export plan is implemented, it could create new complications for Tesla buyers.

Under the terms of a new electric vehicle subsidy and production incentive program signed by President Joe Biden, the incentives available for each vehicle could vary depending on whether it is imported, Reuters said, citing analysts.